For the second time this month, bitcoin has dipped below $40,000, hitting $38,642 midway through the Asia trading session.
Bitcoin is down by nearly 8% in the last 24 hours, according to CoinGecko.
Ether is also down, by nearly 10% and hitting $2,841.
Cryptocurrencies associated with layer 1, or basic, blockchains Solana and Cardano have also been dragged down, posting declines of 9% and 10%, respectively.
"Crypto markets have been sitting on a critical support level for some time. Macro market weakness is causing a sell-off in risk assets. Further continuation of this sentiment will likely see BTC trade in the mid $30s," Stack Funds said in a comment to CoinDesk.
According to CoinGlass, there have been nearly $600 million in liquidations during the last 12 hours. Bitcoin led the liquidation pack at $250 million, followed by ether at $163 million and SOL at $10.9 million.
Binance led the exchanges with liquidations at $173 million, with 91% being long positions. Asia-focused exchange OKEx was next at $170 million, with the majority of positions being longs.
The largest single liquidation order happened on Bitmex in the USDT-bitcoin perpetual swap, and was valued at $9.91 million.
In its daily research note, Delphi Digital wrote that investors are pricing in numerous interest rate hikes, which is significantly impacting risk assets.
"Talk of the town this week is the latest jump in bond yields, most notably U.S. Treasurys, as investors continue to position for an accelerated tightening timeline. The market is now pricing in at least [four] rate hikes this year, with the probability of a [fifth] ticking up this week. While a lot of headlines have focused on nominal yields, it’s the recent spike in real yields that matters more in our opinion, especially for non-income-producing assets like bitcoin and gold," they wrote.
In a note to CoinDesk, Huobi's director of research, Li Hui, told CoinDesk, "Market sentiment is pessimistic, and investors are in a wait-and-see mood." The "decline was very fluid and there was no significant rebound after the support price was broken."
This move appears to have caught the market by surprise, as options chain data suggests there is a significant amount of open interest stuck at $45,000-$46,000 for bitcoin and $3,200-$3,300 for ether, according to Laevitas.
Tony Ling, a partner at China-based Bizantine Capital wrote in a note to CoinDesk that investors in China appear to be continuing to cash out given the economic slowdown in the country because of the latest waves of COVID-19, and the upcoming spring festival holiday. Ling also pointed to tightening supervision of the few over-the-counter desks that exist in the country as another reason local retail investors want out of the market.
UPDATE (Jan. 21, 7:45 UTC): Adds comment in 10th, 12th bullets.