Forget crypto winter; this is a "bloodbath" for bitcoin.

A crypto dealer in Abu Dhabi named Jad Fawaz declares, "I'm nearly bankrupt. I’m laughing because there’s no point in exerting more depression and more frustration about it."

The 45-year-old has seen his holdings disappear in recent months after quitting his real estate career a year ago to concentrate on trading. The worry has kept him from sleeping for a week.

He says, "I had about 40 coins and then I came down to 20 coins then I came down to 10 coins, came down to five coins and now I’m down to the last two coins, and it’s bitcoin and ripple XRP."

"So these are the last two coins and I will die before selling them."

For many retail investors and traders, enough is enough.

Bitcoin balances on cryptocurrency exchanges, where retail investors frequently interact, have decreased from an all-time high of 3.1 million in 2020 to roughly 2.3 million, according to exchange Bitfinex. Self-custody wallet balances have not increased at the same rate, indicating that more money is being sold than stored, it continued.

According to Bitfinex experts, "there are signs that a significant number of retail investors have been discouraged to the point of exiting crypto entirely."

Fawaz is not alone, in fact. Investors have had a terrible year. While the market capitalization of all cryptocurrencies has lost $1.63 trillion in value, the price of Bitcoin has fallen 63%.

The market was pounded hard by Sam Bankman-Fried's FTX exchange's demise.

According to Glassnode data, a 7-day realized loss of $10.16 billion in bitcoin investments occurred in November as a result of investors being compelled to sell long-term positions. This loss ranks as the fourth-largest on record on this metric.

Because the FTX issue was like a domino that brought down so many businesses, this is no longer the winter season, according to Linda Obi, a cryptocurrency investor who works for the blockchain company Zenith Chain in Lagos, Nigeria.

The 38-year-old claimed to trade "a bit of everything," including altcoins and memecoins, and described herself as a "long-haul" trader with a five-year investment horizon.

Since influencer marketing and your favorite celebs have been talking about cryptocurrency, she continued, "I’m gonna be very honest, I do think there’s a whole lot of hype around crypto, with influencer marketing and your favorite celebrities talking about crypto."

"People don’t research, and just jump in, and that should change. We have started to have serious conversations around how we can actually sanitize and advertise the space."

Losses by cryptocurrency retail investors are nothing new. According to a Bank of International Settlements (BIS) analysis, between 2015 and 2022, between 73% and 81 % of cryptocurrency investors probably lost money.

As the cryptocurrency asset class grew, more wealthy, skilled investors like hedge funds entered it, making retail trading more challenging.

"It’s really difficult to trade on news because we don’t have inside information, a tweet can change everything," said Adalberto Rodrigues, 34, of Lisbon, who runs a software company and trades cryptocurrencies on the side.

Blockchain data analysis, according to BIS experts, revealed that the biggest bitcoin holders frequently sold their holdings while lesser players bought, "making a return at the smaller users’ expense."

A trader named Eloisa Marchesoni, who claimed to have roughly $2,000 on FTX that she was unable to withdraw, is confident that cryptocurrency would continue to appeal to smaller investors.

"Retail will suck it up, like always," said Marchesoni, who departs from a location close to Tulum on the Yucatan Peninsula in Mexico.

However, the significant investor losses from the FTX crash may prompt regulators to take action, according to Charley Cooper, director of communications at blockchain technology company R3.

"Politicians have a lot harder time ignoring calls from constituents that lost their savings or grocery money than from high-flying crypto hedge funds."

By fLEXI tEAM