The world's largest cryptocurrency, which has long been plagued by volatility, has lost more than 20% in the previous six days alone, and is now half the price of its April high of about $65,000. Despite this, it has increased by more than 10% this year.
Bitcoin fell as low as $32,094 (£23,078) to its lowest in 12 days, dragging smaller coins down.
It was last down 8.3%, on course for its biggest daily drop in a month.
Why are crypto prices down?
The dip comes as China tightens its grip on cryptocurrencies, with authorities in the southwest province of Sichuan ordering bitcoin mining operations to shut down on Friday.
Last month, China's State Council pledged to crack down on mining and trading as part of a series of financial risk-control measures.
While data on mining is scant, according to figures from the University of Cambridge, bitcoin production in China accounted for around 65 percent of global production last year.
Sichuan is its second biggest producer.
"(The) restriction on Chinese miners could mean they're selling coin into a thin market, dragging us down," said Ben Sebley of London-based crypto business BCB Group.
China's central bank said on Monday that it has recently summoned a number of banks and payment organisations, pressing them to tighten their regulations on cryptocurrency trading.
Separately, China's third-largest lender by assets, Agricultural Bank of China (AgBank), said it was following the People's Bank of China's guidelines and would do due diligence on clients to root out unlawful crypto mining and transactions.
Companies that mine bitcoin - an energy-intensive process - typically hold large inventories of the cryptocurrency, with any moves to sell large amounts depressing prices.
