Bitcoin, ethereum and a host of other popular cryptocurrencies continued their historic downward slide Thursday in a digital currency market that’s lost some $600 billion in value in just the last week.

Is the current tanking just another episode in the notoriously volatile world of crypto valuations or evidence that a bubble, inflated by a mad rush into digital currency investment amid the worst of the COVID-19 pandemic, is simply bursting?

What’s happening: Bitcoin fell below $26,000 for the first time in 16 months, amid a broader sell-off in cryptocurrencies that erased more than $200 billion from the entire market in a single day, according to CNBC.

The price of bitcoin plunged as low as $25,919.33 on Thursday morning, according to Bitstamp data. That marks the first time the cryptocurrency has sunk below the $27,000 level since Dec. 26, 2020. Bitcoin has since pared its losses somewhat and was last trading at $28,291.48, down 3% in the last 24 hours.

Pre CNBC, ether, the second-biggest digital currency, tanked to as low as $1,719.73 per coin. It’s the first time the token has fallen beneath the $2,000 mark since July 2021. Ether was last down 11% at a price of $1,936.07.

Is it crypto business-as-usual or something deeper? Cryptocurrency exchange platforms that mediate transactions and act as portals for crypto investors were riding high, along with record valuations, just a year ago but are following digital tokens into performance troughs.

Cryptocurrency trading platform Coinbase has lost half its value in the past week, including its biggest one-day drop to date on Wednesday and previously reported a $430 million net loss in the first quarter, or $1.98 per share, on declining sales and active users. On Wednesday, shares fell 26%, to $53.72 per share. On the day of its initial public offering just 13 months ago, prices hit $429 per share.

Patrick O’Shaughnessy, an analyst who covers Coinbase for Raymond James, acknowledged in a note to clients that there was an ongoing debate over whether the crypto market was in one of its typical funks or if this was the post-pandemic bubble deflating.

“While management strongly believes the former will prove to be true, we suspect there is more than a bit of truth to the latter, particularly with crypto failing to serve as an inflation hedge thus far in 2022,” O’Shaughnessy wrote.

Structural issues: In a troubling development for the crypto space, tether — a stablecoin that is supposed to maintain a 1:1 peg with the U.S. dollar — slipped in value, trading below 96 cents on the dollar at points before settling at 98 cents, according to a report from Barrons.

Stablecoins are meant to be a sure source of value in the crypto world, making up some 90% of all digital asset trading volumes. The tokens are a prime medium of exchange for payments, trading, lending and other activities based on blockchain technology. 

Drawing wider attention: Unease has morphed into full-on panic, catching the attention of regulators in Washington tasked with maintaining financial stability, per CNN.

As of last Friday, the price of bitcoin had plunged almost 50% from its all-time high as traders — concerned about whether the Federal Reserve’s bid to fight inflation could tip the economy into a recession — dumped riskier investments.

“If we see this continue for multiple days, then we’ll start to get pretty concerned, pretty worried,” Marcus Sotiriou, a crypto analyst at digital asset broker GlobalBlock, told CNN. “The implications are just so large. It’s just unknown.”

Powerful people like Treasury Secretary Janet Yellen are also paying attention, fearful that the situation could create nasty and unpredictable aftershocks for investors of all stripes.

“A stablecoin known as TerraUSD experienced a run and had declined in value,” Yellen said when she testified before the Senate earlier this week, per CNN. “I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability.”

Contributing: Associated Press