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Why is bitcoin crashing? BTC down almost 10% after Colonial Pipeline ransom seized

Another day, another massive drop for bitcoin.

Why is bitcoin crashing? BTC down almost 10% after Colonial Pipeline ransom seized
[Source Photo: rawpixel]
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It’s another rough day for bitcoin. The cryptocurrency is down almost 10% as of the time of this writing to just under $32,800 per coin. So what’s the reason for bitcoin’s plummet this time? China? Japan? Elon Musk?

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None of the above. This time bitcoin’s fall likely has to do with the Colonial Pipeline ransomware attack, reports CNBC. The pipeline was targeted by malware on May 7, effectively shutting down the transport of gas to the East Coast. In order to regain control of its systems, Colonial Pipeline paid the ransom of about 75 bitcoin—worth about $4.4 million at the time.

But as of yesterday, the FBI seized a majority of that bitcoin ransom, enabling the agency to recover 63.7 bitcoin, or about $2.3 million. As Fast Company reported:

Officials said they looked at bitcoin transaction records and identified a bitcoin wallet used to hold the digital currency and were able to seize it under court order. The FBI had obtained the private encryption key, similar to a password, used to transfer funds out of the digital wallet, officials said.

So why did this seizure contribute to bitcoin’s almost 10% drop? It’s likely because it shows that bitcoin isn’t as secure as many people once believed. Just because transactions are done in bitcoin doesn’t mean they are untouchable by national governments.

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Of course, the Colonial Pipeline ransom seizure is just the latest in a long line of hits the reputation of bitcoin has taken this year—all of which have contributed to a massive decline in the value of the cryptocurrency. Back in April bitcoin hit an all-time high of $64,829. But fewer than two months later that has been almost cut in half. It should be noted, however, that bitcoin is still positive for the year so far. The coin’s price is up over 12% YTD.

About the author

Michael Grothaus is a novelist, journalist, and former screenwriter. His debut novel EPIPHANY JONES is out now from Orenda Books. You can read more about him at MichaelGrothaus.com

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