An estimated $400 billion has been wiped off the value of major cryptocurrencies since January.

Sean Russell's life savings were among them.

Russell rarely played the stock market and had little investing experience when he put around $120,000 into bitcoin in November 2017. He was stunned when that turned into $500,000 in just one month.

"I think there was one morning where I woke up, where I made about £12,000 ($15,600) in one morning on my investment and it just kept going," said Russell. "I was thinking, wow, that's mortgages paid, that's holidays that I've always dreamed of."

The dream didn't last for Russell, who works as a property developer in the United Kingdom, buying homes and fixing them up. The price of Bitcoin surpassed $20,000 in December before collapsing. It now trades at $6,300.

Russell attempted to mitigate his losses by shifting money from bitcoin (XBT) to an offshoot called Bitcoin Cash and other cryptocurrencies including Ethereum and Ripple. But that didn't work, and Russell says the paper losses on his initial investment have reached 96%.

"It was devastating, quite traumatic, really," Russell said. "I've seen stories on the news of billionaires going bankrupt, and you think how can that be? How on earth did you lose that amount of money? And yet, here I am in that position."

Russell is not alone.

Michel Rauchs, who researches cryptocurrency and blockchain at the Cambridge Centre for Alternative Finance, said the explosive rise in prices in 2017 attracted a wave of inexperienced investors.

"Retail investors, students, housewives, even grandma was driven in by the hype," says Rauchs. "They were told by the media that this was an opportunity of a lifetime. They bought at the top and are now sitting on heavy losses."

The crash has left professional investors and enthusiasts debating where cryptocurrencies go from here.

"Clearly the frenzy that we have seen and the volatility in the price of bitcoin ... resembles a lot of other financial bubbles that happen over and over again in our economic history," said Benedetto De Martino, a behavioral economist at University College London.

The fever that gripped cryptocurrency investors has faded in recent months. JPMorgan (JPM) CEO Jamie Dimon and Warren Buffett of Berkshire Hathaway (BRKA) have warned investors to stay away from bitcoin.

Last week, bitcoin prices plunged more than 20% in two days after Business Insider reported that investment banking giant Goldman Sachs (GS) may be dropping plans to launch a crypto trading desk.

Goldman Sachs told CNNMoney it hadn't made a firm decision bitcoin or other cryptocurrencies.

The Securities and Exchange Commission blocked several proposals for bitcoin exchange-traded funds in the past few months, including plans from ETF giants ProShares and Direxion and one backed by the Winklevoss brothers.

Despite the warnings, some cryptocurrency entrepreneurs see the boom and bust as growing pains.

"Markets are cyclical and there's still a lot of opportunity for sophisticated investors," said Benjamin Dives, CEO of cryptocurrency trading platform London Block Exchange.

Before he first invested, Russell spent years tracking bitcoin and studying blockchain, the technology underpinning digital currencies. He said the learning process was like solving the plot of a murder mystery.

Despite the loss, he remains a committed investor.

"I have to be hopeful about something," he said. "I need to keep my mind occupied, because when I just focused on the money I lost, it destroyed me mentally and emotionally."

— Anna Stewart contributed to this report.