Bitcoin slumped back below $85,000 on Wednesday, reversing sharply after testing the $87,000 mark again earlier in the day.

The flagship cryptocurrency took a breather from its recent rally, falling 2%, to $84,448, after briefly breaking above $87,000 for the second time this week. It sank as low $83,551 during the session.

Bitcoin remains 3.5% off from where it stated the year and 33% lower than its all-time high of $126,272 last October.

Investors' sentiment had been on the rise through the early part of the week amid signals that peace talks could be coming between the U.S. and Iran.

That optimism wore thin in the crypto and U.S. equities markets on Wednesday when the 10-year Treasury yield jumped back over 5% for the first time since July 2007, strengthening the U.S. dollar and sapping investors' risk appetites.

The latest run-up in yields kicked off as oil prices climbed above $100. Iranian President Masoud Pezeshkian told the United Nations that Iran wouldn't surrender to Washington's bullying or give up its nuclear program. Yields continued to climb after Federal Reserve governor Michael Barr said he expects the central bank would likely need to raise interest rates further to tamp down inflation.

Bitcoin climbed to a peak of $87,315 on Monday, its highest level since January, led by strong inflows into U.S. spot bitcoin exchange-traded funds. Bitcoin ETFs have posted a net inflow of more than $2.3 billion over four consecutive days, with $1.7 billion of that coming in the latter two days, according to data from CoinGlass.