Tony Yoo, a financial analyst, at home in Playa Vista, Calif., Aug. 17, 2018. Rozette Rago | The New York Times

SAN FRANCISCO — Pete Roberts of Nottingham, England, was one of the many risk-takers who threw their savings into cryptocurrencies when prices were going through the roof last winter. Now, eight months later, the $23,000 he invested in several digital tokens is worth about $4,000, and he is clearheaded about what happened. "I got too caught up in the fear of missing out and trying to make a quick buck," he said this week. "The losses have pretty much left me financially ruined." More from The New York Times:

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Subpoenas signal SEC crackdown on initial coin offerings Mr. Roberts, 28, has a lot of company. After the latest round of big price drops, many cryptocurrencies have given back all of the enormous gains they experienced last winter. The value of all outstanding digital tokens has fallen by about $600 billion, or 75 percent, since the peak in January, according to data from the website coinmarketcap.com. The virtual currency markets have been through booms and busts before — and recovered to boom again. But this bust could have a more lasting impact on the technology's adoption because of the sheer number of ordinary people who invested in digital tokens over the last year, and who are likely to associate cryptocurrencies with financial ruin for a very long time.

"What the average Joe hears is how friends lost fortunes," said Alex Kruger, a former banker who has been trading in the cryptocurrency markets for some time. "Irrational exuberance leads to financial overhang and slows progress." It is hard to know how many cryptocurrency investors are now in the red, with holdings worth less than the money they put in. Many who have lost money in recent months had gotten into the markets before the big run-up last year, and their holdings are still worth more than their initial investments. But by many metrics, more people put money into virtual currencies last fall and winter than in all of the preceding nine or so years. Coinbase, the largest cryptocurrency brokerage in the United States, doubled its number of customers between October 2017 and March 2018. The start-up Square began allowing the users of its mobile app, Square Cash, to buy Bitcoin last November.

Almost all of the new customers on Coinbase and Square would be in the red if they bought cryptocurrencies at almost any point over the last nine months and held on to them. The damage is likely to be particularly bad in places like South Korea and Japan, where there was minimal cryptocurrency activity before last year, and where ordinary investors with little expertise jumped in with abandon. In South Korea, the biggest exchanges opened physical storefronts to make it easier to invest for people who didn't feel comfortable doing it online. The offices of one big exchange, Coinone, had just one customer walk in during a two-hour period in the middle of the day last week. An employee, Yu Ji-Hoon, said "the prices of the digital tokens have fallen so much that people seem to feel upset." Kim Hyon-jeong, a 45-year-old teacher and mother of one who lives on the outskirts of Seoul, said she put about 100 million won, or $90,000, into cryptocurrencies last fall. She drew on savings, an insurance policy and a $25,000 loan. Her investments are now down about 90 percent. "I thought that cryptocurrencies would be the one and only breakthrough for ordinary hard-working people like us," she said. "I thought my family and I could escape hardship and live more comfortably but it turned out to be the other way around."

In the United States, Charles Herman, a 29-year-old small business owner in Charleston, S.C., became obsessed with virtual currencies last September. He said he now felt like he had wasted 10 months of his life trying to play the markets. While he is essentially back to the $4,000 he put in, he has soured on the revolutionary promises that virtual currency fanatics made for the technology last year and has resumed investing his money in real estate. "I guess I thought we were 'sticking it to the man' when I got on board," Mr. Herman said. "But I think 'the man' had already caught on, and had an exit strategy." Much of the anger that investors feel is toward the smaller virtual currencies, or alt coins, that entrepreneurs sold in so-called initial coin offerings. These coins were supposed to serve as payment mechanisms for new software the entrepreneurs were building. But almost none of these companies have delivered the software they promised, leaving the tokens useless, except as speculative assets. Several coins have been exposed as outright scams. "I think I'd like to see most alts go to zero before I feel like the whole space isn't overpriced," Mr. Herman said. Bitcoin has generally held on better with investors. It is down about 70 percent from all-time highs, rather than the 90-percent losses that lesser-known digital tokens have suffered. But it, too, has struggled to win much usage beyond speculative investments. "We also saw that Bitcoin isn't ready for mass adoption and day-to-day use," Mr. Herman said. Despite this pessimism, the social networks where cryptocurrency fanatics gather to trade information are full of people talking about their intention to hold on to their coins, in the hope that they will recover once the technology has time to catch up with the hype. Tony Yoo, 26, a financial analyst in Los Angeles, invested more than $100,000 of his savings last fall. At their lowest point, his holdings dropped almost 70 percent in value. But Mr. Yoo is still a big believer in the idea that these tokens can provide a new way to transact online, without the big corporate middlemen we rely on today. Many of the groups that raised money last year are still working on the products they promised, with lots of serious engineers drawn to the projects. "There's just so much more behind this new wave of technology and innovation that I'm sure will take over our society in due time," Mr. Yoo said. With prices down so much, he said he was actually looking to put more money into the markets. That thinking has been encouraged by the people who invested in Bitcoin in 2013, when it first topped $1,000. That bull market was followed by a crash in which the price of Bitcoin dropped more than 80 percent. But after a long fallow period, the price recovered. Even with recent losses, the value of one Bitcoin is hovering around $6,500 — up more than 500 percent from the peak of 2013. "Five years ago, I was broke, unemployed, and ashamed to use my real name," Ryan Selkis, a popular virtual currency personality, wrote on Twitter last week. "For the new fanatics, stick around for your own 14 month, 85% downdraft and you'll not regret it." Twitter is also filled with complaints, like the one from a user named @Notsofrugaljoey, who wrote: "It's really hard to stomach losing all my hard earned money. Just broke down and cried." On Reddit, a user in the United Arab Emirates posted a picture of the $100,000 loan he'd taken out in December to buy cryptocurrencies — and that he will now be paying back out of his salary for the next three years. Mr. Roberts, the British investor who has seen most of his $23,000 vanish, is holding onto his coins in case they turn around. But for now he has stopped trading and is looking for another job. "I'm living off the little savings I have left still in my bank account," Mr. Roberts said. "I've made a mistake and now I'm going to have to unfortunately pay the cost for the next few years."

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