Bitcoin in freefall as virtual currency plunges below $US250

Confidence in the virtual economy appears to be waning. Photo: Getty

The price of Bitcoin has plunged below $US250 and appears to be in freefall, as sell orders dominate global exchanges and investors flee the cryptocurrency.

Bitcoin's entrance into 2015 has been appalling, in the last 10 days alone the price has lost 26 per cent in value. Its rapid decline in recent weeks suggests confidence in the virtual currency is evaporating.

On Wednesday, CoinDesk recorded the price dropping to about $224 from $267, below where it began in April 2013. Large sell orders were triggered as Bitcoin sank through the $US250 mark, which traders have flagged as an imporant psychological barrier.

Bitcoin price plummets. Photo: CoinDesk

"We are seeing some huge orders sitting waiting at the $US200 mark and a lot of volume," an IG analyst told Fairfax Media. "That could be the next resistance point but we don't really know where Bitcoin is heading at the moment.

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"I think it might hover around where it is for a while."

Some analysts pointed to the $US5 million hack of major exchange Bitstamp at the beginning of January as a potential spook for traders. The exchange suspended activity after the theft of 19,000 Bitcoins, however trading began again at the end of last week.

While some traders may be scurrying to pile on the short swaps or top-up their margin accounts, the plummeting price of Bitcoin has been felt throughout the cryptocurrency economy. Miners have found the sharp drop in price has directly affected their ability to stay in business.

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Bitcoin in freefall as virtual currency plunges below $US250