While vacationing with friends in Buenos Aires last month, Alex Beene, a Tennessee government worker, said the topic of cryptocurrencies briefly came up during a dinner conversation.

The 30-year-old from Nashville told them he had bought bitcoin and litecoin last fall but recently sold most of his holdings. The discussion quickly shifted to another subject.

“Months ago, they would’ve been genuinely interested in how to invest in [cryptocurrencies], how it works, and where I [thought] the price was going,” he said. “Now it’s something that’s the brunt of jokes, like I had invested in comic books or baseball cards.”

After bitcoin’s frenzied rally last year, prices have lost about two-thirds of their value from a December high. The cryptocurrency had been trading around $7,000 in recent days, although a sharp jump Thursday morning briefly lifted the price above $7,900, according to CoinDesk. Nonetheless, in the past few months, bitcoin has faded off the front pages of newspapers and it no longer dominates people’s social-media feeds. Global internet searches for the word “bitcoin” have fallen by over 80% from December, according to Google Trends.

Bitcoin’s average daily trading volume this month is about 70% lower than on the most active days at the end of last year, according to bitcoinity.org. That includes steep declines on some of the biggest U.S. platforms, including Gemini, an exchange founded by Cameron and Tyler Winklevoss, and San Francisco-based Coinbase. At one point in December, Coinbase was the most-downloaded free app in Apple Inc.’s App Store. Now, it doesn’t make the top 200.


J.C. Parets, a technical markets analyst in New York, remembers getting multiple phone calls a day about cryptocurrencies late last year. Clients, old high school friends, strangers and even his 88-year-old grandmother were intrigued.

“It wasn’t even like ‘should I buy crypto’ but instead it was ‘which one?’” he said. “Everyone was in on it.”

Four months later, those calls stopped coming.

“Nobody cares anymore,” Mr. Parets said.

To be sure, crypto die-hards are still passionate about digital currencies. But many first-time bitcoin buyers who came into the market in December and January are sitting on losses. Mainstream interest in the cryptocurrency market has diminished.


Regulators in the U.S., South Korea, and India are trying to curb speculative activity. Facebook Inc., Google Inc. and Twitter Inc. are banning advertising related to cryptocurrencies to stop scammers from promoting fraudulent schemes on these social-media platforms.

“All the hype is gone,” said Vijay Boyapati, a software engineer in Seattle who previously worked at Google and a food-delivery startup, and is nevertheless preparing to take a job in the cryptocurrency industry. “I think right now we’re in the boring phase.”

Mr. Boyapati, who bought his first bitcoin in 2012, has been through the market’s boom-and-bust cycles. “Once the crescendo happens, it usually doesn’t come back immediately,” he said.

When the investor frenzy dies down, “that’s when the most value is created,” he added, referring to the industry’s ability to innovate and implement new technological advancements that “will fuel the next boom.”

Among the cadre of investors who still believe in cryptocurrencies are the early adopters—people who bought in years ago and remain optimistic regardless of wild, short-term moves in prices. They buy and HODL—an acronym for “hold on for dear life”—that often epitomizes cryptocurrency enthusiasts.

The question is whether this group is enough to propel cryptocurrency prices back to new highs.


“There is no question that there was mania and lots of dumb money at the top,” said Peter Atwater, an adjunct professor at The College of William & Mary in Virginia and a research analyst who looks at how social behavior influences financial markets.

“The problem with that is that the low—when it comes—will be debilitatingly low,” he said. “No one will want to touch it. Think dot-com stocks at the low. I don’t think we are anywhere close to that point yet.”

Bitcoin’s nearly four-month bear market has coincided with slowing growth in the number of people opening new wallets online to store their cryptocurrencies, according to Blockchain.info.

That isn’t a positive indicator for cryptocurrency prices, said Nicholas Colas, a veteran analyst and co-founder of DataTrek Research, a new research firm that analyzes financial markets, including cryptocurrencies.


“The bottom line is that bitcoin is no different from any other emerging technology,” he said in a recent note. “It requires incremental adoption from new users in order to grow in value.”

And the typical mainstream investor like Mr. Beene, who works in the Tennessee Department of Labor and Workforce Development, remains skeptical. Even though he sold out at a profit, he said he believes cryptocurrencies “got too hot too quickly” and he has no plans to return to the market anytime soon.

“Six months ago, crypto was billed as the investment of the century,” he said. “Now it’s become a fading trade that can’t live up to its lofty reputation.”

As bitcoin has emerged from the underground world of nerds and criminals to become a mainstream investment, the risk of hacks and scandals has also blossomed. What's a government to do? The WSJ's Steven Russolillo travels the world (sort of) to see how regulators are responding to the remarkable rise of cryptocurrencies. Video: Sharon Shi and Crystal Tai

Write to Steven Russolillo at steven.russolillo@wsj.com