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Bitcoin has fallen to levels last seen during the crypto sell-off in May.

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

As of 2:31 p.m. in New York, the largest token had fallen as far as 9.9% to $31,036, but had recovered some of those losses to trade around $32,363. The Bloomberg Galaxy Crypto Index dropped as much as 15% before reversing course by midday. Ether, Litecoin, and EOS are among the altcoins that have fallen in value.

“Bitcoin can't seem to catch a break,” Antoni Trenchev, managing partner and co-founder of Nexo, a cryptocurrency lender, said. “Overall, we're dealing with a long-drawn-out regulatory overhang, which will continue to weigh on the Bitcoin price. In the end, it's good for the sector — and crypto needs the correct kind of regulation — but it's definitely best to look away for short-term investors.”

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 locate the Bitcoin by identifying 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 capacity to trace and recover Bitcoin goes against the anti-establishment mentality that led to its creation, it may also be considered as a positive indication for the industry as it seeks mainstream recognition.

Tuesday's drop, according to Bloomberg Intelligence's Mike McGlone, is "related to fears about the Fed snatching 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.

One barrier is $30,000, which the cryptocurrency briefly reached during a severe selloff last month. However, given the lack of technical support between $20,000 and $30,000, breaking that round-number barrier might unleash another wave of selling. Bitcoin's relative strength index, on the other hand, is indicating that the cryptocurrency is approaching the oversold level, signalling a possible reprieve.

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, according to Tallbacken CEO Michael Purves. 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 Jeffrey Halley, a senior market analyst at Oanda, may lead to "another surrender." Rich Ross of Evercore ISI predicts a test of support around $29,000.

Although Bitcoin is still up around 12% this year, it has fallen from a high of about $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 significant drawdowns throughout its brief history, so it's to be expected. After being extended to the upside, it simply rolled over.”

Tthe 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, said Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte.

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