Bitcoin moved up by more than 20% over the weekend, removing more than $10,000 (£7,395) off the price of a single coin.
The fall places the cryptocurrency on the pace for its biggest one-day drop since March, when the COVID-19 pandemic was just starting to tear global markets.
Bitcoin fell as low as $30,500 on Monday afternoon – its lowest point since 5 January – after reaching a record $42,000 on Friday.
According to Sky News, the crash prompted the UK’s Financial Conduct Authority to warn that those who invest in cryptocurrencies should be prepared to lose all of their money.
In a press release, the FCA said crypto investments generally involve very high risks – and some investment companies may understate these dangers while exaggerating potential returns.
British consumers were also told that they would be unlikely to have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong.
Laith Khalaf, a financial analyst at AJ Bell, said: “The regulator is clearly concerned that the high risks already inherent in cryptoassets are being compounded by scam activity, as well as unregulated firms targeting consumers with marketing material that highlights the rewards, but not the potential downside, of investing in cryptoassets