Bitcoin value tumbles to $33,200

Bitcoin slumped to a two-week low, with some analysts pointing to the recovery of Colonial Pipeline Co.’s ransom as evidence that crypto isn’t beyond government control.

The largest token tumbled almost 7% at one point on Tuesday and was around $33,200 as of 8:21 a.m. in New York. The wider Bloomberg Galaxy Crypto Index fell as much as 10%.

The fact that investigators “could trace the untraceable and seize it might be undermining the libertarian, free-of-government-control case,” said Jeffrey Halley, a senior market analyst at Oanda. The implications of that may have provoked the selling, he said.

The U.S. recovered almost all the Bitcoin ransom paid to the perpetrators of the cyber attack on Colonial last month in a sign that law enforcement is capable of pursuing online criminals even when they operate outside the nation’s borders.

The FBI was able to find the Bitcoin by uncovering the digital addresses the hackers used to transfer the funds, according to an eight-page seizure warrant released by the Justice Department on Monday.

While the FBI’s ability to track and recoup the crytocurrency may go against the anti-establishment ethos that led to the development of Bitcoin, it can also been seen as a positive sign for the sector as it seeks broader mainstream acceptance.

Meanwhile, strategists are watching key technical levels for Bitcoin.

“The major price support stands at the $30K level, and a slide below this handle could run into stops and accelerate the sell-off in the short run,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

Oanda’s Halley said a break below $30,000 could lead to “another capitulation.” Evercore ISI’s Rich Ross sees a test of support around $29,000.

Bitcoin is still up 14% this year but the token has plunged from a peak of almost $65,000 in mid-April, casting a pall over the cryptocurrency sector. The selloff was exacerbated by billionaire Elon Musk’s public rebuke of the amount of energy used by the servers underpinning the token. Harsh Chinese regulatory oversight also soured the mood.

The virtual currency -- which has more than tripled over the past year -- is now in a “cooling off period” that could last “a few months” longer, said Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte.