A key investment case for the digital currency is not as strong as it used to be.
The price of the virtual currency fell to a two-week low after Russian President Putin ordered troops into eastern Ukraine.
By its backers, digital gold is often referred to as Bitcoins. The term refers to the idea of a store of value similar to gold, one that is unrelated to other financial markets.
The asset can serve as a hedge against global economic uncertainty and increasing prices, which can reduce the purchasing power of the U.S. dollar.
With inflation at historic highs, you would expect this would be the time to shine.
Since hitting an all-time high of nearly $69,000 in November, the coin has lost half of its value. Analysts are questioning if it is still a form of digital gold.
The vice president of corporate development and international at Luno said thatBitcoin is still early in its maturity curve.
The S&P 500 closed out Tuesday's session in correction territory, with the latest declines for bitcoin in tandem. The correlation between the S&P 500 and the price of bitcoin has been steadily rising.
Tech stocks are falling due to fears that lofty valuations may come down as the Federal Reserve and other central banks begin to hike interest rates.
Chris Dick, a quantitative trader at B2C2, told CNBC that the correlation between the two has been high over the last few months.
The correlation shows that at the moment, bitcoin is a risk asset and not a safe haven.
It has been shown that gold has been better than bitcoin recently. Spot rates for the precious metal reached their highest levels since June 1 on Tuesday, climbing as high as $1,913.89 per troy ounce.
John Roque, head of technical strategy at 22V Research, said in a research note Monday that the asset purported to be the answer to every question has quietly weakened.
We continue to expect gold to make a new all-time high, and we are looking for a return to 30,000 for Bitcoin.
The last time a bear market took place was in late 2017, when the price of bitcoin plunged as much as 80%.
Many analysts say market conditions have changed and that the downturn in digital currency prices is not indicative of a winter. According to experts, there are now a lot of institutions holding the virtual currency, which is one reason why it is more closely correlated with stocks.
Dick said that the adoption of cryptocurrencies by investors from traditional asset classes is the driving force behind the correlation between the two. He said that the relationship could be broken at any time given the different markets.
Ayyar says that to compete with gold as a store of value, there needs to be more widespread adoption of bitcoin.
He said that the fundamentals have always been made sense, with limited supply currency not affiliated with any nation state.
It needs to go through its due process of monetization, where it is held by a large enough pool of participants, more retail flow, and larger institutions.
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