Bitcoin prices saw a small correction Thursday, falling about 10% in less than 24 hours since December's flash crash and trading at their lowest level in almost a month.
CoinDesk statistics shows that the world's most popular digital asset fell to $42,503.87 during early Asia trading Thursday.
Bitcoin has increased by almost 500% since the end of 2019 as a result of stimulus measures implemented in response to the COVID-19 outbreak.
Cryptocurrency price movements are occurring against the backdrop of a turbulent moment for financial markets.
Inflation is accelerating, compelling central banks to tighten monetary policy, threatening to diminish the liquidity tailwind that has boosted a broad variety of assets.
U.S. markets extended their losses as the Federal Reserve's minutes indicated the possibility of earlier and faster interest rate hikes. The S&P 500 index sank roughly 2%, led by real estate stocks, while the technology-heavy Nasdaq 100 fell 3%. On Thursday morning, stock losses expanded to Asia.
While last week's decline in the price of Bitcoin was significant, the cryptocurrency has been in a downtrend since November 2021, according to David Keller, chief market strategist at StockCharts.com.
This distribution pattern has pulled bitcoin's price below the early December low of roughly 44,000, and "price support should be expected between present levels and the September 2021 low of around 40,000," he told Forbes.
Other cryptocurrencies have also plummeted. Ether, the second-largest cryptocurrency by market capitalization, surpassed its own flash crash low to hit depths not seen since Oct. 13, while Binance Coin also fell to October levels.
The value of major DeFi applications such as Aave and Uniswap tokens decreased.
Other facets of the cryptocurrency realm are also under fire. Bitcoin mining stocks have taken a hit as experts reassess their outlooks following a record-setting year.
Bitcoin had risen to a record high of about $69,000 in early November following the approval of Bitcoin futures-based exchange-traded funds by U.S. authorities.
Collin Plume, chief executive and founder of My Digital Money, also weighed in on the matter, highlighting several critical technical levels.
According to Plume, Bitcoin's critical support level will be around $45,000, while resistance will be around $55,000.
Although bitcoin prices have recently dipped, Goldman Sachs believes that significant increases are still ahead in the next years.
Goldman Sachs predicted last week in a paper that bitcoin may more than double in value over the next five years, reaching slightly more than $100,000 per coin.
Zach Pandl, co-head of Goldman Sachs' global foreign currency and emerging market strategy, estimates bitcoin may increase by around 18% yearly for the next five years to reach $100,000.