Digital currency plunge may be healthy for cryptocurrency market

"The markets ... have certainly appreciated more quickly than the fundamentals have, and this is a shakeout to hopefully draw the financial reality closer to the fundamental reality," said analyst and author Chris Burniske.

In the last two days, bitcoin plunged more than 30 percent to below $10,000, according to CoinDesk.

Digital currency lending and exchange company Bitconnect, which many prominent cryptocurrency investors have called a scam, said Tuesday it is shutting down its platform.

The cryptocurrency market rout may be the beginning of a needed washout that digital currency enthusiasts have been waiting for.

"The markets over the last year have certainly appreciated more quickly than the fundamentals have, and this is a shakeout to hopefully draw the financial reality closer to the fundamental reality," said analyst Chris Burniske, co-author of "Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond."

In a stunning 2,000 percent surge over 12 months to a December peak above $19,000, bitcoin captured enough of Wall Street's attention to spur the launch of futures contracts on the world's largest futures exchange, CME, and its competitor, Cboe.

Other digital currencies, such as ripple and ethereum, leaped even more rapidly. Token sales, or initial coin offerings, raised the equivalent of more than $4.2 billion last year, according to financial research firm Autonomous Next. And tiny companies saw their stocks skyrocket after adding "blockchain" to their names.

Total market capitalization of cryptocurrencies globally over the last 12 months