Bitcoin has recovered slightly, but is still set for a record series of losses after the collapse of the so-called stablecoin.
Crypto-assets have risen after a digital token called Terra, which is to be pegged to the US dollar, fell in value.
The impact has engulfed markets with Bitcoin, the largest cryptocurrency in total market value, reached a minimum in 16 months at one point.
Crypto-assets have also been hit by extensive sales of risky investments due to fears about high inflation and rising interest rates.
Bitcoin traded above $ 30,500 (£ 24,920) on Friday.
It was something of a recovery after a 16-month low of about $ 25,400 (£ 20,753) reached on Thursday.
But it remains well below the level of a week ago, which was about $ 40,000 (32,682 pounds), and if there is no rebound in trade over the weekend, it will head to a record seventh loss in a row.
“I don’t think the worst is over,” said Scotty Siou, investment director of Axion Global Asset Management, a Hong Kong-based firm that manages crypto-index funds.
“I think there will be even more downsides in the coming days.
“I think we need to see that open interest is much more collapsing, so speculators really aren’t out of it, and that’s when I think the market is stabilizing.”
But broad financial markets have so far not seen a small effect from the collapse of cryptocurrencies.
James Malcolm, head of currency strategy at UBS, said: “Crypto is still tiny, and crypto-integration in broad financial markets is still infinitesimally small.
“The idea that what’s going on in the crypt stays in the crypt is in many ways we are still in the moment.”
Sales have roughly halved the global market value of cryptocurrencies since November, but this has turned into panic in recent trading due to pressure on stablecoins.
Fitch said in a note Thursday that there could be “significant negative effects” on cryptocurrencies and digital finance if investors lose confidence in stablecoins.
However, Fitch said weak links between cryptocurrencies and regulated financial markets would limit the potential for cryptocurrency volatility to cause greater financial instability.