Bitcoin fell over 6% today to its lowest in two weeks as a rout in global bond markets sent yields flying and sparked a sell-off in riskier assets.
The world's biggest cryptocurrency slumped as low as $44,451 before recovering most of its losses.
It was last trading down 1.2% at $46,525, on course for a drop of almost 20% this week, which would be its heaviest weekly loss since March last year.
The sell-off echoed that in equity markets, where European stocks tumbled as much as 1.5%, with concerns over lofty valuations also hammering demand. Asian stocks fell by the most in nine months.
"When flight to safety mode is on, it is the riskier investments that get pulled first," Denis Vinokourov of London-based cryptocurrency exchange BeQuant wrote in a note.
Bitcoin has risen about 60% from the start of the year, hitting an all-time high of $58,354 this month as mainstream companies such as Tesla and Mastercard embraced cryptocurrencies.
Its stunning gains in recent months have led to concerns from investment banks over sky-high valuations and calls from governments and financial regulators for tighter regulation.
Meanwhile, Etsy chief executive Josh Silverman said the e-commerce retailer is not thinking about accepting bitcoin as a form of payment right now, saying more people need to buy and own it before it can be used as tender.
Mr Silverman said he personally has been a holder of the world's biggest cryptocurrency for the last six or seven years as he sees it as an interesting store of value.
Etsy shares were trading 8% higher premarket, after it reported better-than-expected fourth-quarter revenue and gave a strong first-quarter forecast.