Bitcoin is down after the Colonial Pipeline ransom was paid.

Bitcoin fell to a two-week low, with experts citing a technical breakdown as well as the recovery of Colonial Pipeline Co.'s ransom as proof that cryptocurrency isn't immune to government control.

In New York trading, the largest token fell as much as 9.9% to $31,036. The Bloomberg Galaxy Crypto Index dropped as much as 15%, with altcoins like Ether, Litecoin, and EOS falling even more.

According to Jeffrey Halley, a senior market analyst at Oanda, the fact that investigators “could trace the untraceable and take it might be undercutting the libertarian, free-of-government-control case.” He believes the ramifications of this may have prompted the sale.

The United States has recovered nearly all of the Bitcoin ransom paid to the culprits of the cyber attack on Colonial last month, demonstrating that law enforcement can track down online criminals even when they act outside of the country's boundaries.

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 cryptocurrency may go against the anti-establishment ethos that led to the development of Bitcoin, it can also be seen as a positive sign for the sector as it seeks broader mainstream acceptance.

Tuesday's drop, according to Bloomberg Intelligence's Mike McGlone, is "linked to fears of the Fed seizing people's Bitcoins." “We've been in a down-phase for a month now, and this is part of it,” he says. It's a continuation of the recent decline, with this being the most recent jolt. I was under the impression that Bitcoin would be mentioned on the Colonial news today, so I'm perplexed.”

Meanwhile, cryptocurrency experts are keeping an eye on crucial technical levels.

If Bitcoin doesn't keep making higher lows, it may retest $30,000, which it briefly reached during a violent selloff last month. Given the lack of technical support between $20,000 and $30,000, if the coin exceeds that round-number barrier, another wave of selling could ensue. However, Bitcoin's 14-day Relative Strength Index (RSI), which is now at 32, is approaching the oversold level, indicating that the cryptocurrency may find some relief.

According to Tallbacken CEO Michael Purves, if the coin continues to fall and $31,000 and $30,000 are taken out, it might retrace its entire breakout from $20,000 and fall back to that level. In a note, he added, “This type of ‘round trip' would not be unexpected for an asset (or a stock) that put in an exponential advance,” noting that something similar happened following its 2017 rally.

Other market observers concur. “The primary price support is below $30K, and a drop below this handle could trigger stops and accelerate the sell-off in the short term,” said Swissquote senior analyst Ipek Ozkardeskaya.

A breach below $30,000, according to Oanda's Halley, might lead to "another capitulation." Rich Ross of Evercore ISI predicts a test of support around $29,000.

Although Bitcoin is still up 9% this year, it has fallen from a high of nearly $65,000 in mid-April, putting a gloom over the cryptocurrency industry. The latest selloff was worsened by billionaire Elon Musk's vocal criticism of the token's servers' energy use. The mood was also sullied by China's strict regulatory supervision.

“You had this phenomenon where Bitcoin became extended, but nothing goes up in a straight line,” Potomac Fund Management portfolio manager Dan Russo said. “You've seen these bouts of substantial drawdowns throughout its short history, so that's to be expected. It simply rolled over after being extended to the upside.”

According to Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte, the virtual currency, which has more than tripled in value over the previous year, is currently in a "cooling off period" that might continue "a few months" longer.

(Updates prices throughout, adds technical analysis, and adds McGlone, Purves, and Russo's remarks)

-With thanks to Anchalee Worrachate, Claire Ballentine, Kenneth Sexton, and Joanna Ossinger for their contributions.

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