BitcoinThe cryptocurrency markets plunged to $27,000 on Thursday as a result of fears that rising inflation would lead to the demise of the controversial stablecoin.

Bitstamp data shows that bitcoin prices plunged to $26,595.52 this morning. Since Dec. 30, 2020, bitcoin fell below $27,000 for the first-time since then.

At 1:30 AM ET, bitcoin was trading at $27,061, down 15% in the last 24 hours. Bitcoin traded at $27.061, down 15% over the past 24 hours.

EtherThe 2nd-largest digital currency,, fell as low as $1789 per coin. This is the first time that the token fell below the $2,000 mark in 2021.

The price for Ether last dropped 23% to $1,852.

Investors flee cryptocurrency at a moment when stocks markets are plummeting from highs set by the coronavirus pandemic, fearing soaring costs and a worsening economic outlook.

U.S. inflation data released Wednesday revealed that prices for goods and service rose 8.3% in April. This was higher than analysts expected and is close to its highest point in over 40 years.

Traders’ thoughts are also affected by the collapse of Terra stablecoin protocol.

TerraUSDUST (or UST) is meant to reflect the dollar’s value, but Wednesday saw a plunge to below 30 cents, shaking confidence in so-called centralised finance.

Stablecoins can be compared to the crypto-world’s bank accounts. They are often trusted by investors in digital currencies to protect them from market volatility.

UST however, an algorithmic stablecoin, is struggling to keep its value stable as holders flee for the exit.

UST trades at a current price of 62c per unit, well below the $1 peg.

Luna, another Terra token that has a floating price and is meant to absorb UST price shocks, erased 97% of its value in 24 hours and was last worth just 30 cents — even less than UST.

The implications of bitcoin are causing investors to be nervous. Luna Foundation Guard — a fund set up by Terra creator Do Kwon — had amassed a multibillion-dollar pile of bitcoin to help support UST in times of crisis.

Luna Foundation Guard may sell large amounts of its bitcoin holdings in order to help its struggling stablecoin. It’s an extremely risky move, given that bitcoin is volatile.

Investors were also worried Thursday by a decline in the price of tether (the world’s largest stablecoin). At one time, the token fell below 99 cents. Economists fear that the tether might not have enough reserves to support its dollar peg in case of massive withdrawals.