Ipod 5 stuck in recovery mode

So I've had my ipod 5th gen (32GB) for just over a year. No problems, no damage until this week. My iPod started to lose track of time, and could not connect to "set time automatically" function. It would tend to crash and reboot as well as loosing its internet connection. I was still at iOS 8.8 I think (just before Apple Music update), therefore, I decided that I should update my iPod to fix the issues. I plugged it to iTunes, started the update and iTunes said the iOS is corrupt and it must restore the iPod to factory settings. My iPod enters recovery mode and the screen displays that I must plug it in to iTunes. Here's my current and unsolved issue: I start to restore the iPod. The top of the iTunes window says "extracting software". AS SOON as the "extracting software" is finished, my iPod reboots. The restoring process stops because iTunes loses the iPod. When my iPod reboots, it's still in recovery mode. Every time I restore, it crashes, and the cycle continues...

Please help!

Thanks.