Bitcoin fell below the psychologically significant level of $10,000 on Wednesday morning, marking a second day of double-digit declines for the virtual currency. One bitcoin is now worth $9,700, less than half its peak value of $19,500 achieved just last month.

Bitcoin's fall is part of a broader cryptocurrency sell-off. For the second day in a row, every major cryptocurrency has suffered double-digit declines over the previous 24 hours.

Ethereum is now worth $810, down 42 percent from its peak above $1,400 just four days ago. Litecoin has fallen to $150—down 58 percent from its peak of $360 on December 19. Bitcoin Cash, a rival version of bitcoin, was worth more than $4,000 on December 20. It's now down to $1,500, a 65 percent decline.

There doesn't seem to be any specific factor driving the wide-ranging sell-off. There have been some hints that South Korea might regulate cryptocurrencies more strictly, but it's hard to believe those rumors are enough to drive a big global sell-off.

More likely, the current round of panic-selling reflects the huge number of new investors that have flooded into the market in recent months. Coinbase, a leading bitcoin exchange, announced in November that it had an astonishing 13 million investors.

Many of those new investors know little about the underlying technology and have little experience investing in highly volatile investments like bitcoin. As long as the price was going up, they were happy to continue holding or even buy more. But when the price starts to drop, some of them inevitably lose their nerve and panic-sell, accelerating the price decline.

The big question is what will happen after this shake-up is over. We might find out that the run-up of the last few months was a purely speculative boom, in which case Bitcoin might never recover its earlier highs. On the other hand, people might see bitcoin's low price—at least compared to a few days ago—as a buying opportunity, causing bitcoin's price to start rising once again.