The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.

What happened: Bitcoin (BTC-USD) dropped more than 3% on Tuesday to hover above $62,400 per token.

What's behind the move: The world's largest cryptocurrency sank alongside the overall market as tech stocks fell. Bitcoin's trajectory this week has mostly followed the major averages, particularly the tech sector.

"We think Bitcoin's renewed sell-off reflects a combination of: (i) a hawkish shift in the Fed outlook; (ii) record institutional ETF outflows and thinning liquidity," Deutsche Bank strategist Marion Laboure wrote in a note on Tuesday.

The token turned lower "as investors seem keen to cut their risk exposure all round," noted David Morrison, senior market analyst at Trade Nation.

"As things stand, it looks vulnerable to further weakness should investors continue to reduce their equity holdings," he added.

What else you need to know: Bitcoin has struggled to make a comeback this year, with strategists warning a cyclical bear market for cryptocurrencies may not be over. However, long-term holders throwing in the towel could signal that the market is nearing a potential turning point.

"Selling from long-term BTC holders (6+ months) continues to increase which is a typical sign of late-cycle capitulation," Compass Point analyst Ed Engel noted on Monday.

Bitcoin has underperformed broader markets since the March 30 market lows. The token briefly fell to $60,000 in early June, its lowest level since late 2024.

The token is down roughly 28% year to date and about 50% from its all-time high last October.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

Click here for the latest technology news that will impact the stock market

Read the latest financial and business news from Yahoo Finance