The returns from Bitcoin this year are sliding below traditional assets as cryptocurrencies struggle to claw back ground lost in a rout in May.

The largest token tumbled almost 6% at one point in Asian trading Tuesday and was at a two-week low of about US$33,000 as of 1:07pm in Hong Kong. The wider Bloomberg Galaxy Crypto Index fell as much as 10%.

Bitcoin is still up 14% this year but that trails commodities as well as some European and Asian share gauges. The proximal cause of Tuesday’s weakness was unclear - one theory was that the recovery of a high-profile Bitcoin ransom by the US showed the token isn’t beyond official control to the extent claimed by its biggest proponents.

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

Strategists such as Halley and Evercore ISI’s Rich Ross are watching key technical levels for Bitcoin. Halley said a break below US$30,000 could lead to "another capitulation.” Ross sees a test of support around US$29,000

Bitcoin 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.

 - Bloomberg