Based on January results, bitcoin, the largest cryptocurrency by market value, saw just 11 days of growth, meaning bitcoin spent 65 percent of the month in decline. Other digital assets have also suffered: the second-place token Ether has fallen about 30% percent since the end of December.

Bitcoin has plunged to $33,000 from a record high of nearly $69,000 less than three months ago amid a broader drop in risk assets due to the Fed’s upcoming rate hike. The fall has affected all corners of the crypto ecosystem, from bitcoin and memcoins to publicly listed cryptocurrency exchanges and miners.  

“Cryptocurrencies are a very volatile asset class, and I hope all participants in this market realize the potential for volatility,” Troy Gajeski, chief market strategist at FS Investments, said by phone. “It’s a much more challenging environment than it was six months ago, 12 months ago, 18 months ago when it was a green light. Now it’s a ‘yellow light’, a ‘watch out’.”

Bitcoin fell 2.9 percent on Monday and was trading at around $36,680, but has since recovered some of its losses.   According to a report by CryptoCompare, the price drop also led to a drop in trading volume.

“Macroeconomic sentiment around risk assets was the leading factor in markets amid expectations of a significant reduction in quantitative easing” following a series of hot inflationary prints, the analysts wrote in the report.

Investment products linked to digital assets saw outflows for the first time since August, with weekly outflows averaging $88 billion in January, they said. And total assets under management in bitcoin products have fallen 23% since December.

From its November peak to its January lows, bitcoin has lost roughly 50 percent. According to Goldman Sachs’ Zach Pandl and Isabella Rosenberg, this drop puts it at the “lower end of the range” of large drawdowns in historical terms.

The pair estimates that since 2011, there have been five previous major pullbacks of the coin from then-historic highs, with an average decline from peak to low of 77%.

On average, these declines have lasted between seven and eight months, they wrote in their note. Bitcoin’s largest cumulative decline – a 93% loss – occurred in 2011, they noted.  

While the recent market turmoil may not have shaken cryptocurrency veterans accustomed to its volatility as much, many investors entered the market relatively recently, so the precipitous decline was particularly painful.  

“I’ve always said that if you’re not comfortable waking up after a 30, 40, even 50 percent drop for whatever reason, you probably shouldn’t own cryptocurrency,” Gajeski said.  

And memories of the last “cryptozyme” – a phrase specific to the digital asset sphere that signifies a sharp downturn followed by months of calm – heighten fears that a repeat may now be underway.

The last such downturn occurred in 2018, when bitcoin fell by about 80 percent and then took more than a year to reach another high.  

“While bitcoin’s decline was relatively mild this week, the outlook for the cryptocurrency market as a whole remains negative, with strong losses seen across a range of once-popular altcoins,” said Nicholas Cowley, strategist at DailyFX. “If the market as a whole expects bitcoin to be a growth leader, it is likely to be disappointed.”