January was one of the worst months for bitcoin since 2018

The past January turned out to be one of the worst months for bitcoin since the "crypto winter" of 2018, Bloomberg notes in its publication. The cryptocurrency grew only a third of the days in January, while the remaining time was marked by a decline. Bitcoin has hit a low of about $33,000, to which it has fallen in less than three months since reaching an all-time high of $69,000. The decline occurred against the background of a broader sell-off of risky assets in financial markets, caused by expectations of curtailing the Fed's economic stimulus measures.

"Cryptocurrencies are a very volatile asset. I hope that all participants in this market are aware of the potential for volatility—" said Troy Gayeski, leading market strategist at FS Investments. - Conditions are much more difficult now than they were 6, 12 or 18 months ago. Then cryptocurrencies were given the "green light to go." The yellow warning light is on right now."

The decline in the market has affected volumes, the CryptoCompare company notes:

"Macroeconomic sentiment around risky assets has been a defining theme in the market, along with expectations of a significant reduction in quantitative easing."

Digital asset-based products experienced significant outflows for the first time since August. The average weekly outflow in January amounted to $88 million, and the total volume of assets in bitcoin-based products decreased by 23%.

Goldman Sachs analysts say that January put bitcoin "at the lower end of the range" of major declines on a historical scale. According to their estimates, from 2011 to this time, bitcoin has experienced five major declines from absolute highs, the average size of which was 77%. Usually such periods last from 7 to 8 months, they write.

"I've always said that if you're not ready to wake up and see a 30%, 40%, or even 50% drop, whatever the reason, maybe you shouldn't get involved," Gayeski continued.

DailyFX strategist Nicholas Cowley believes that a new stage of volatility may await cryptocurrency investors ahead:

"Although the decline in bitcoin has been relatively smoothed out with the onset of the new week, the prospects for the cryptocurrency market as a whole remain negative, while the once popular altcoins are suffering significant losses. If the market as a whole hopes that bitcoin will pull it further up, most likely, it will be disappointed."