Bitcoin prices fell below $27,000 for the first time in over 16 months on Thursday, May 13th, plunging as low as $26,595.52 according to Bitstamp data and marking the first time the coin has sunk below the $27,000 level since December 30th, 2020.

Ethereum, the second-biggest cryptocurrency, dropped as low as $1,789 per coin (down 23%), which is the first time the value has fallen under the $2,000 line since July of 2021.

Investors have been fleeing from cryptocurrency investments, coinciding with the stock market drop and soaring commodity prices. U.S. inflation data from Wednesday showed that prices for goods and services rose to 8.3% in April, close to the highest level in 40 years. Despite cryptocurrency being “decentralized finance”, the stablecoin TerraUSD, or UST, which should be mirroring the value of the dollar, plunged to less than 30 cents Wednesday. Some investors have shaky confidence in the stablecoin, a barely regulated crypto world, which they often turn to in times of a volatile market. 

While there was an 80% drop in Bitcoin value in 2018, this time, the falling prices have a larger impact due to the number of people and institutions that hold the currencies now. During the COVID-19 pandemic, virtual currencies gained popularity within the masses, with 16% of Americans now owning some as compared to the 1% back in 2015, according to a Pew Research Center survey.  Large institutions like banks, such as Northern Trust and Bank of America, joined the cryptocurrency wave as well.

Critics have said that the collapse was “long overdue”, but some traders likened the concern and fear to the start of the 2008 U.S. financial crisis. While early investors are still likely in a comfortable position due to the rate at which cryptocurrency values have risen since their initial investments, the sharp declines this week have heavily impacted investors who bought the coins during the price surge last year.

The drop in cryptocurrencies aligns with a larger economic trend this year, influenced by the rising interest rates, inflation spikes, and the Russia-Ukraine war’s lasting uncertainty in the economy. These factors have contributed to a “pandemic hangover”, during which the U.S. started returning to normal after two years of COVID-19 prevalence, which has also hurt the stock prices of lockdown-thriving companies such as Netflix and Zoom.

But crypto’s decline is more severe than the general dip in stock market prices, dropping 40% in the same period that the S&P 500, a stock market index tracking the performance of 500 big companies that are listed on stock exchanges in the U.S., dropped 18%. Bitcoin has fallen 20% in the last 5 days itself, compared to a 5% drop in the S&P 500.

“It’s hard to say, ‘Is this Lehman Brothers?’” said Charles Cascarilla, a founder of the blockchain company Paxos, who refers to the financial services firm that had gone bankrupt at the start of the 2008 Great Recession. “We’re going to need some more time to figure it out. You can’t respond at this type of speed.”