Bitcoin (BTC-USD) has extended its losses this month tracking the lead of global stock markets as geopolitical tensions, inflation pressures and another COVID outbreak in China weigh.
The largest crypto by market value fell as much as 3.3% to $38,223 (£30,006), the lowest level since 15 March and down over 20% since last month's high. It was 1.3% lower to $39.173 at the time of writing.
Smaller cryptocurrencies that usually move in tandem with the crypto also plummeted, with ethereum (ETH-USD) slumping as much as 4.8% to $2,799, a level not seen since 18 March.
With the Federal Reserve expected to raise interest rates by 50 basis points in the coming months to wrestle inflation under control, experts warn that some of the factors that have fuelled gains in the crypto market could be reversing as investors shy away from the so-called digital gold in favour of safe havens like gold (GC=F) to hedge against inflation.
While bitcoin is mostly driven by user growth and network usage, the crypto moves strongly in line with the tech-heavy Nasdaq 100 (^NDX), and is negatively correlated with the dollar.
On Friday, the Dow Jones (^DJI) tumbled 2.8%, posting its worst one-day decline since 2020 as Fed chair Jerome Powell signalled plans to rapidly hikes rates and amid concerns about slowing corporate earnings.
"As it becomes more valuable to hold dollars, some investors may reallocate from bitcoin or gold to the dollar," analysts at Nydig wrote. "Like the negative correlation of bitcoin to the dollar, the negative correlation of bitcoin to real rates has only emerged in the last couple of years."
Read more: Crypto live prices
Meanwhile, the renewed coronavirus outbreak in China has triggered jitters over a strict lockdown much like in Shanghai, which could exacerbate global supply chain issues and send inflation surging even higher.
It follows analysts' warnings the crypto market was teetering towards a prolonged bear cycle, pointing to the $400bn slashed from the combined cryptocurrencies since early April.