Bitcoin (BTC-USD) and Ethereum (ETH-USD) are tumbling in what has been an ugly start to the year for cryptocurrencies.

Bitcoin, the largest digital cryptocurrency, has extended its slide to fall to as far as $39,558 Monday morning, dipping below the crucial $40,000 level for the first time since September 2021. It is nearing what is known as the "death cross," a bearish indicator which occurs when the 50-day moving average dips below the 200-day moving average, and could mean bitcoin is entering a bear market.

Meanwhile, ethereum — the second-largest digital coin — slumped 2.76% to $3,020.16 after briefly dropping below the key $3,000 level, seen for the first time back in May 2021. At its peak in November, the cryptocurrency topped $4,800 after clawing its way back from below $2,000 in July 2021.

The sell-off in crypto comes amid concerns over potential rate hikes by the Federal Reserve as soon as this quarter that has rocked the broader markets since last week as investors began dumping risky assets.

"The minutes from the Fed have increased expectations that the central bank of the world’s largest economy will now move faster to raise interest rates to fight soaring inflation,” said Nigel Green, chief executive and founder of deVere Group. "As a result, there’s been a knee-jerk sell-off on Wall Street and the crypto market as it is perceived by some traders that such a move puts at risk the liquidity that has benefitted many asset classes, including bitcoin.”

Bitcoin has now lost about one-third of its value since its all-time high of $67,000 in November 2021 —marking its worst start to the year for the token since 2012.

—

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn