Bitcoin's (BTC) price tumbled along with U.S. stocks, bringing the cryptocurrency’s decline since Sunday to 17%, the most for a two-day period since the coronavirus-fueled crash in March 2020. The decline has wiped out more than $100 billion of bitcoin’s market value, which last week climbed past $1 trillion for the first time.  

And while many traders are still bullish on bitcoin in the long term, analysts said the largest cryptocurrency, now changing hands around $47,000, may have further to fall in the coming days, traders and analysts said.

“The current market is extremely overheated,” Flex Yang, founder and chief executive officer of Hong Kong-based crypto lender Babel Finance, told CoinDesk. Prices could fall as low as $40,000, he said. 

Bitcoin staged a mini-rebound Tuesday after the New York state attorney general’s office announced a settlement of a dispute involving the stablecoin tether (USDT). But the rally proved short-lived and appeared to peter out as prices approached $50,000. 

Market sentiment remains largely bullish, and there are signs some investors are buying the dip.

In China, demand for tether has gone up, as evidenced by the stablecoin’s premium over the Chinese yuan on over-the-counter trading desks, when prevailing foreign-exchange rates are taken into account. 

For example, earlier on Tuesday, a screenshot of Huobi OTC, the similarly named exchange’s fiat-to-crypto trading platform, showed a 2% premium between USDT’s price, expressed in yuan, and the going exchange rate for the Chinese currency in U.S. dollar terms, per Bloomberg data.

Guy Hirsch, managing director for U.S. at eToro, told CoinDesk he saw 26% more new bitcoin positions opened than closed on the trading platform, which would “help drive markets higher in the longer-term.”

"We don't believe any of the weakness should be construed as being symptomatic of structural weakness or a lack of confidence in crypto assets,” Joel Kruger, cryptocurrency strategist at institutional crypto exchange LMAX Digital, said. “There will once again be tremendous opportunity for existing players to increase exposure and new participants to take on fresh exposure into the dip.”