The free fall in the global cryptocurrency market continued on Thursday as over $275 billion were wiped off from its global market cap within 24 hours and Bitcoin dropped to nearly $27,000 - a level it saw in December 2020.

The global cryptocurrency market cap reached the $1.25 trillion mark, down 13 per cent in the last 24 hours. Bitcoin accounts for about a third of the cryptocurrency market.

The global crypto mayhem was triggered by the total collapse of Terra Luna cryptocurrency that was linked to the US dollar.

Tether (USDT) cryptocurrency dropped to 97 cents, losing its parity with US dollars.

According to CoinDesk, traders sold USDT for US dollars amid poor sentiment for stablecoins in crypto communities.

Also, rising inflation across the globe have left investors worried over the looming economic slowdown.

Ethereum also dropped around 20 per cent in the past 24 hours.

Other cryptocurrencies like Shiba Inu, Dogecoin, Solana and Cardano also lost about one-third of their value.

The global cryptocurrency market cap was trading at the $1.25 trillion mark, down 13 per cent in the last 24 hours. However, the total cryptocurrency trading volume rose about 40 per cent to $218.14 billion.

The decline can be attributed to nervousness over the US Federal Reserve's determination to tackle inflation. The Fed last week announced an interest rate increase of 50 basis points.

Bitcoin investors are likely to lose up to $545 million this year, owing to various reasons like forgetting passwords to their wallets or making a mistake in recording their "seed phrases", according to a new report.

A seed phrase is a series of words generated by your cryptocurrency wallet that give you access to the crypto associated with that wallet.

Analysts have estimated that at least 20 per cent of all Bitcoin is lost and that the majority of those funds are irretrievably lost.

According to research from CryptoAssetRecovery.com, between $272 million to $545 million of Bitcoin will be lost this year.