Bitcoin dropped below $20,000 on Saturday, extending a brutal slide in cryptocurrencies.

The price of bitcoin fell more than 6% in 24 hours to $19,149.60, according to Coin Metrics data. The last time bitcoin fell below the $20,000 level was December 2020.

Ether, the second-largest token, plunged 7% to $996.2, its lowest level since January 2021.

Crypto investors are grappling with aggressive interest rate hikes from the U.S. Federal Reserve and a worsening liquidity crunch that has pushed major players into financial difficulty.

The Fed on Wednesday hiked rates by 75 basis points, its biggest increase since 1994. That has led to a retreat from risky assets of all stripes, including stocks and crypto.

Elsewhere, the crypto space is still reeling from the fallout of the $60 billion collapse of two major tokens last month.

Terra, a so-called stablecoin that was meant to be worth $1, crashed to a fraction of a cent, taking an associated coin called luna down with it.

This week, $3 billion crypto lender Celsius halted withdrawals, locking users out of their funds and raising fears it may face insolvency.

Celsius acts a lot like a bank, taking investors’ crypto and lending it out to institutions to generate a return on deposits. It holds lots of assets in the so-called decentralized finance space.

Celsius, which says it is “acting in the interest of our community,” did not return multiple requests for comment.

Another key player, Three Arrows Capital, is in the midst of its own liquidity crisis.

The $10 billion crypto hedge fund is reportedly on the brink of insolvency after the plunge in crypto markets reduces the value of its holdings.

3AC was an investor in Terra and has made leveraged bets on numerous tokens including bitcoin, ether and solana.

Zu Shu, the firm’s co-founder, said it was “in the process of communicating with relevant parties and fully committed to working this out.”

On Friday, he told The Wall Street Journal that 3AC was considering asset sales and a rescue by another firm to avoid collapse.

3AC did not respond to a CNBC request for comment.

Ryan Shea, an economist at crypto investment firm Trakx.io, said the recent stress in digital assets was the “crypto market equivalent of natural selection.”

“Absent a central bank, the onus is on firms operating in the space to be responsible and those that aren’t (i.e., excessive leverage, poor risk management, poor security etc) will not succeed,” Shea said in a research note Friday.

“This process is without doubt painful, but ultimately the lack of a centralized backstop is a good thing as it means moral hazard is avoided because there are no bailouts in crypto unlike in the fiat system.”

— CNBC’s Jessica Bursztynsky contributed to this report.