Bitcoin is sinking

Bitcoin is trading down 5.8% at $3,656 a coin on Thursday amid mounting reports of a crackdown on the digital coin by Chinese regulators.

Reports last week that Chinese regulators would require exchanges to voluntary shut bitcoin tradingtriggered a sell-off of nearly $1,000, bringing the price of the cryptocurrency below $3,000 for the first time in over a month. Within hours, however, bitcoin recouped most of those losses.

Many bitcoin enthusiasts don't view the crackdown as a significant problem. Josh Olszwicz, a bitcoin trader, told Business Insider the news out of China won't have a longterm impact on bitcoin because it doesn't affect the cryptocurrency's blockchain, the underpinning technology of the coin.

"If it doesn't affect the protocol, then it's not a real problem," he told Business Insider."The bitcoin cash shakeup was much more worrisome from my perspective, but even then the core bitcoin protocol remained unaffected."

On August 1, bitcoin forked into two different cryptocurrencies: bitcoin and bitcoin cash.

Bitcoin is up about 429% this year.