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The world's preeminent cryptocurrency had regained some ground to $32,000 at the time of writing.
However, overnight bitcoin dipped to a new low of $29,000 with well over $1bn (£811m) in bitcoin longs being liquidated.
Confidence in the cryptocurrency as a hedge against a crash in traditional markets has been tested as bitcoin seems to be marching in step with global stock markets, especially the Nasdaq (^IXIC).
But, this has not stopped president Nayib Bukele of El Salvador and Tron founder Justin Sun from declaring they are buying back in.
Read more: Crypto live prices
In a show of courage or desperation, the Salvadoran president revealed how he had bought back into the new low.
Bukele tweeted on Tuesday: "El Salvador just bought the dip!
"500 coins at an average USD price of ~$30,744."
El Salvador just bought the dip! 🇸🇻
500 coins at an average USD price of ~$30,744 🥳#Bitcoin
— Nayib Bukele (@nayibbukele) May 9, 2022
Justin Sun, who is the founder of Tron DAO, reinforced the move and replied: "We have echoed Nayib Bukele's voice and purchased 500 BTC with an average price of 31031.35 for $15,515,675."
Analysts now fear the whole cryptocurrency space is teetering into a bear market.
Rising interest rates across the world have sent investors in traditional markets fleeing to safe havens.
The glory days of low-interest rates are over and traders seem less likely to invest in riskier crypto-assets that had once provided such strong returns.
This pullback by institutional and retail investors has highlighted how the performance of bitcoin and other cryptocurrencies is tightly connected to US tech stocks.
The correlation between bitcoin and the Nasdaq Composite has reached record highs.
Read more: Bitcoin drops 50% from November peak
Global stock markets have fallen sharply amid fears over inflation and supply chain obstructions in China sparking a slowdown in exports.
As fears of a global financial meltdown increase, bitcoin has correlated with traditional markets and followed their downward spiral.
The overall cryptocurrency market capitalisation is now less than $1.5tn, down by more than half from its all-time high in November 2021.
Observers of the crypto space appear divided over whether the latest bloodbath is a sign of a longer-term bear trend or just a temporary dip in what has been an exceptionally tumultuous year for bitcoin.