The price of bitcoin slumped to its lowest level since early January today amid a sell-off that some argue may be linked to the U.S. Federal Bureau of Investigation seizing bitcoin from a hacking group.

Having risen to above $65,000 in April, the price of bitcoin plunged to $31,088 at 10:24 a.m. PDT. The drop was off the back of a strong sell-off not just of bitcoin but of all cryptocurrencies.

Omkar Godbole at Coindesk wrote that there wasa net outflow of 22,500 bitcoin on Monday, its single biggest net drain since November 2020. The number of bitcoins held in exchange wallets fell to a three-week low of 2.54 million from 2.56 million.

The shift doesn’t necessarily indicate a sell-off, however. “Investors typically move coins from exchanges to wallets, taking out liquid supply from the market when they intend to buy and hold in anticipation of price rallies,” Godbole noted.

The overall shift in market sentiment dates back to May 19, with yet more Elon Musk tweets and concerns over a regulatory crackdown in China. The crackdown in China is ongoing, as the accounts of cryptocurrency “Key Opinion Leaders ” on Weibo, China’s version of Twitter, were blocked over the weekend.

Some media outlets pushed the theory that the new price drop is somehow related to the FBI seizing $2.3 million in bitcoin from DarkSide, the group behind the Colonial Pipeline Co. ransomware attack in early May. That argument is that it undermines confidence in the cryptocurrency.

“This shows bitcoin isn’t as secure as many people believe,” Anthony Denier, chief executive officer of trading platform Webull, told The New York Post. “Criminals have been using bitcoin because of the supposed inability of governments to get at it, but if the U.S. did reclaim the money, that destroys that claim. This could be a very big problem for people trying to get money out of countries with poor economies. If governments can claw it back, that hurts its appeal.”

Even if it’s not clear that the FBI seizure alone triggered the sell-off, broader regulatory concerns in both the U.S. and China could be a factor.

Another theory is that the drop is being partially driven by U.S. monetary policy. Sebastian Sinclair at Coindesk noted that “markets worldwide have also been trading on shaky ground as investors eye the possibility the U.S. Federal Reserve could begin to unwind from its liquidity-boosting quantitative easing program.”

Bitcoin was trading at $32,724.96 as of 9:49 p.m. EDT, down 3% over the last 24 hours but up from its earlier lows.

Image: Marco Verch/Flickr