The party in the crypto market is starting to feel like a distant memory.
After a disappointing end to 2025, major cryptocurrencies have languished to start the new year. Bitcoin has shed roughly one-third of its value since hitting a record high in October, including a 4.2% drop in January. Ether has slid more than 40% from last summer's all-time highs.
The slump has continued even though stocks are still near records, with the gains broadening throughout the market and investors betting the economy will keep growing . A weakened dollar had also pushed investors toward alternative assets for safety in the so-called debasement trade.
Yet prices for cryptocurrencies have slid while old-fashioned bets such as blue-chip stocks and gold have paid off. On Friday, bitcoin slipped further after President Trump announced Kevin Warsh as his pick for the next Federal Reserve chair.
"It's a mess out there," said Gennaro Salemme, a 32-year-old car salesman in Chicago. "The vibe right now is 'stay alive.'"
Salemme still keeps roughly 40% of his $200,000 portfolio in crypto investments including ether, XRP and bitcoin ETFs. He first bought bitcoin nine years ago when the price was $3,000, and said he's "100%" still bullish on it for the long term. But holding on can be excruciating when everyone else is abandoning ship.
"Everyone wants to leave when things go south," Salemme said. "A lot of this is emotionally driven."
After rallying in early 2025, digital assets have surrendered much of the spotlight to the artificial-intelligence race, which sucked up investors' capital and powered a third straight year of double-digit gains in stocks. A weakening job market and escalating geopolitical tensions also forced crypto investors to rethink their riskier holdings.
Some traders are hoping for relief ahead. Warsh, Trump's Fed pick, has made supportive comments about bitcoin in the past, but some investors fear he could support tighter monetary policy and hurt riskier assets.
Wall Street's stomach for those riskier bets could be tested next week, with earnings reports due from crypto-treasury company Strategy. Big tech names like Palantir, Amazon.com and chip maker Advanced Micro Devices are also slated to report their financial results, and a jobs report from the Labor Department is due this coming Friday.
Investors have yanked a net $227 million out of spot bitcoin exchange-traded funds through Jan. 28, according to Morningstar Direct data. On Friday, bitcoin dropped to its lowest level since the tariff turmoil that roiled markets last April, according to Dow Jones Market Data.
The bleak mood in cryptoland is in stark contrast to the start of last year, when investors cheered what many believed would be a new golden era for digital assets. Major Wall Street firms had already launched spot bitcoin ETFs, pushing digital tokens into the mainstream. And Donald Trump was back in the White House, promising to turn America into a "bitcoin superpower."
Then last summer, President Trump signed into law a measure to regulate stablecoins, fueling expectations that clearer rules could help boost the crypto industry.
"It was almost like it was 2021 all over again," said Lewis Carr, a 19-year-old college student in Texas who sold gaming consoles on Facebook Marketplace to fund his crypto investments. "Like you couldn't lose money."
But the celebratory mood eventually gave way to a hangover.
Carr keeps about a quarter of his roughly $6,000 portfolio in crypto and still puts about $50 a week into bitcoin, ether and XRP. But the slide has tempered his optimism.
"Crypto right now is a total gamble," he said. "I think everybody realizes that."
Will Warden had similarly high expectations not so long ago. The commercial real-estate broker, 44, had watched crypto from the sidelines for years, then jumped in after Trump took office last January.
"My expectations were that by late spring, summer of 2025, I would have had a huge return," he said. "But that didn't happen."
Warden has decided to ride out the downturn, but his father and brother have cashed out of their crypto holdings. "A lot of people are exhausted, or irritated, or angry," he said.
Adding insult to injury, crypto's rout has continued as a retro alternative -- precious metals -- has stolen the show. Gold and silver prices have soared in the past several weeks, skyrocketing past stock-market returns and notching record after record, though they slid on Friday after Trump named Warsh as his Fed pick.
But in crypto, "a lot of people gave up, they lost hope," said Maryah Kulaylat, a 26-year-old client manager at a crypto asset-management firm.
Kulaylat is holding on through the downturn, citing a lesson learned buying meme coins and gaming tokens in the earlier days of her crypto-investing career: "There's no point in selling when you're down 90% on something," she said.
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