The price fell from above $52,500 to below $44,000 on Tuesday, according to CoinMarketCap.
It has since recovered slightly and is trading back above $46,000 at the time of writing.
Several other leading cryptocurrencies also suffered heavy losses, including Ethereum (ether), Cardano (ada) and Binance Coin.
“Horrible chart damage being done in BTC and the rest of the crypto market, tweeted crypto analyst and author Glen Goodman.
“Bitcoin just bounced cleanly off the previous resistance line. Is this a retest of that line or the start of something much worse?”
The price correction has wiped hundreds of billions from the overall market, which was worth more than $2.35 trillion at the start of the day.
Leading cryptocurrency exchange Coinbase experienced issues as people rushed to their portfolios to either cash out or buy the dip.
The company said it was “aware transactions are currently delayed or cancelled at elevated rates and our apps may be experiencing errors.”