The value of Bitcoin, which has been on a downward trend since March, briefly dipped below the $30,000 mark on Tuesday, 10 May. It has now fallen by over 50 percent from its peak value in November 2021.
Ethereum fell to around $2,300.
Most major cryptocurrencies are under pressure, taking cues from stock markets around the world which have been declining due to hikes in interest rates, among other reasons.
Japan's benchmark Nikkei index was down by around 2 percent and NASDAQ was down by 1.4 percent on Monday, while Sensex has fallen nearly 4 percent in the past week.
With a total value of $650 billion, Bitcoin accounts for about a third of the cryptocurrency market.
Until recently, trading of digital assets was dominated by individual investors, but the market is now seeing an influx of professional investors, such as hedge funds and money managers, according to the BBC.
This has led to cryptocurrency markets closely mimicking global stock markets.
Recently, central banks around the world, including in the US, UK, and Australia, have raised interest rates to tackle inflation. On 4 May, the Reserve Bank of India (RBI) also raised the repo rate by 40 basis points.
Crypto is one of the most volatile asset classes, and investors tend to move away from such assets during times of uncertainty.
The hiked interest rates could result in reduced borrowing, impacting global economic growth – a prospect which worries investors. The prolonged Russia-Ukraine crisis has also created supply chain issues for several industries, adding to the economic uncertainty.
Non fungible tokens (NFTs), which saw explosive growth in 2021, also appear to be losing steam.
NFT sales have plummeted 92 percent over the last eight months, from a daily average of 225,000 in September to about 19,000 this week, according to the market tracker NonFungible.
(With inputs from BBC.)
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