Bitcoin balances on crypto exchanges - where retail investors typically transact - have fallen to around 2.3 million from its 2020 all-time high of 3.1 million, exchange Bitfinex said.

Self-custody wallet balances have not grown at the same pace, indicating more selling than storage, it added.

"There are signs that a significant number of retail investors have been discouraged to the point of exiting crypto entirely," Bitfinex analysts said.

November saw a 7-day realized loss of $10.16 billion in bitcoin investments as investors were forced to exit long-term positions, the fourth-largest loss on record by this measure, according to Glassnode data.

"This is not the winter season anymore, this is a bloodbath, because the FTX crisis was like a domino that toppled so many companies," said Linda Obi, a crypto investor in the Nigerian city of Lagos who works at blockchain firm Zenith Chain.

"I'm nearly bankrupt," says Jad Fawaz, a crypto trader in Abu Dhabi. "I'm laughing because there's no point in exerting more depression and more frustration about it."

The 45-year-old, who quit his real-estate job a year ago to focus on trading, has seen his holdings evaporate in recent months. He hasn't slept in a week because of the stress.

"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," he says.

Crypto retail investors losing money is nothing new. A study from the Bank of International Settlements (BIS), conducted between 2015 and 2022, estimated that 73% to 81% likely lost money on their investments in cryptocurrencies.

Retail trading has grown increasingly difficult as deeper-pocketed, more sophisticated investors like hedge funds entered crypto as the asset class grew.

"It's really difficult to trade on news because we don't have inside information, a tweet can change everything," said Lisbon-based Adalberto Rodrigues, 34, who trades crypto in addition to running a software firm.

BIS researchers said blockchain data analysis found that the largest holders of bitcoin often sold while smaller players were buying, "making a return at the smaller users' expense".

Eloisa Marchesoni, a trader who said she had about $2,000 on FTX she was unable to withdraw, is sure crypto will retain its attraction for smaller investors.

"Retail will suck it up, like always," said Marchesoni, who leaves near Tulum on the coast of Mexico's Yucatan Peninsula.

Yet the hefty investor losses from the FTX collapse could serve to kick regulators into action, said Charley Cooper, communications chief at blockchain technology firm 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."