"What we're seeing now is a bit of panic selling," Brian Kelly, founder and CEO of BKCM said on CNBC's " Power Lunch ". "Investors that were in it, and maybe caught the hype in November and December, are now panic selling out."

Bitcoin came close to hitting its lowest point of the year, last seen on June 18 when it retreated to $5,785.

The world's largest digital currency by market value tumbled as low as $5,900.38, according to CoinDesk index data, which tracks prices from several exchanges. The cryptocurrency later recovered to $6,125.37, and was down 2 percent as of 5:50 p.m. ET.

Bitcoin fell below $6,000 Tuesday for the first time since June as the majority of cryptocurrencies declined in value.

The top 80 digital currencies by market capitalization were also lower as of Tuesday afternoon, according to data from CoinMarketCap.com. The total crypto market capitalization has fallen by about $19 billion in the past 24 hours.

Ether, which is the second largest cryptocurrency behind bitcoin, was the biggest loser among the top five by market capitalization and fell to its lowest level since September, according to historical data from CoinMarketCap.com. The cryptocurrency dropped more than 9 percent to around $264 as of 5:50 p.m. ET. XRP meanwhile fell 5 percent to 26 cents.

The latest digital coin rout followed bitcoin's rally last month above $8,000. News of institutional interest in the space by the likes of asset management giant BlackRock, as well as a collaboration between New York Stock Exchange owner Intercontinental Exchange, Starbucks and Microsoft on a digital asset platform, had lifted sentiment in the market.

Charles Hayter, chief executive of digital comparison site CryptoCompare, said the downward move in cryptocurrencies was on the back of the postponement of a bitcoin exchange-traded fund, or ETF, proposed by VanEck and Solid X. If approved, that ETF would be the first to track cryptocurrency assets.

Hayter described Monday's sell-off as "momentum-based selling following the ETF kickback," and "the usual gyrations of a market in a depressed mode."

The SEC's move to delay a decision on the VanEck Solid X bitcoin trust ETF followed the regulator's rejection of a separate ETF proposal from the Winklevoss twins. Cameron and Tyler Winklevoss had made a second attempt to list shares of a bitcoin ETF, which would have been commodity-based.

Bitcoin has recently recovered its dominance in the market as several so-called "altcoins," or alternative cryptocurrencies, have plummeted in value. Still, it's down roughly 70 percent from the all-time high near $20,000 hit in December.