Bitcoin keeps falling Wednesday

The exchange ultimately resumed services after admitting that about $5 million worth of bitcoins had been stolen. O'Connor said the development may have spooked some cryptocurrency speculators, as Bitstamp had a reputation as one of the more professional outfits in the bitcoin community.

"I would imagine they were inundated with requests for withdrawal on Friday," he said.

Read MoreBitcoin breaks another key level

Another factor weighing on the cryptocurrency is that Russia is beginning to ban bitcoin-related websites, "Fast Money" trader Brian Kelly pointed out in a blog post.

Still, the selling that continued into Wednesday may also be part of a vicious cycle, as some have theorized on the influential Reddit bitcoin forum. In other words, the low prices may be forcing volunteers who "mine" new bitcoins to cut their losses. If the price falls below the electricity and hardware costs of "mining" bitcoinsa process that involves solving highly complex mathematical algorithmsthen the enterprise becomes unprofitable, and some miners will be forced to sell their holdings and give up.

That said, bitcoin's death has been predicted many times (one site has counted 29 obituaries), and some predict that the technology behind the system could live well beyond the currency it now supports.

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Bitcoin keeps falling Wednesday