Key Takeaways
- Bitcoin’s price has dropped by more than $30,000 in the last six weeks, a reminder that the most popular cryptocurrency’s value is highly unpredictable.
- Even when conditions seem favorable, crypto assets can be volatile because of limited supply, concentrated ownership among “whales,” and hair-trigger market sentiment.
- Bitcoin’s volatility presents great risks for everyday investors, but also the chance for gains from significant price swings.
Just this fall alone, the price of Bitcoin, the leading cryptocurrency, has plunged by more than a quarter (28%), dropping below $90,000 before rebounding about 4%. At 2 p.m. Eastern on Tuesday, the price stood at $93,848. But back on Oct. 7, it was over $124,000—a $30,000+ difference.
The rapid price shifts are a gut-wrenching reminder that the world’s most popular cryptocurrency remains breathtakingly volatile, swinging on everything from whale trades to weekend headlines.
The whiplash is especially striking as many investors expected a sustained run upward, thanks to a crypto-friendly administration and relaxed U.S. Securities and Exchange Commission (SEC) oversight. But almost two decades after Bitcoin’s launch, the token still behaves less like digital gold and more like a speculative fever dream.
So why does Bitcoin remain so volatile, and what should you know before adding it to your portfolio?
Why This Matters to You
Bitcoin is a volatile asset. If you’re currently invested in it, remember your investment strategy and why you added it to your portfolio in the first place. If you’re not invested in crypto but have been considering it, think strategically about how this asset fits into your portfolio and whether you’ll be able to weather the volatility that comes with it.
When the Market Sneezes, Bitcoin Catches a Cold
Bitcoin’s price swings come down to basic economics: supply and demand. There will only ever be 21 million bitcoin in existence, and a surprisingly small number of accounts control a huge chunk of that supply. These so-called “Bitcoin whales” can move markets with a single trade, and when they decide to sell—or even hint at selling—prices can crater fast.
To prevent total meltdowns, exchanges often cap how much Bitcoin can be liquidated in a single day. That might sound like it gives you some cover against sudden losses, except that it could mean you might watch your portfolio bleed out while being unable to sell, stuck holding bitcoins you can’t offload because the whales hit the daily limit first.
In addition, it’s not just crypto prices you need to watch. Stumbles in the markets have increasingly led to sell-offs, as cryptocurrencies tend to be the first assets investors dump when fear sets in. That’s because crypto is seen as a “risk-on” asset—something you hold when you’re feeling confident, not when you’re setting up your defenses for a downturn. So when the market drops, as we’ve seen in the mid-2020s, crypto losses might be even bigger.
Hype, Fear, and the 24/7 News Machine Feeding Crypto Trading
Bitcoin’s price doesn’t just respond to fundamentals, but lives and dies by hype and speculation. While some crypto investors might be buying Bitcoin because they think it’ll revolutionize finance, many are investing because they’re hoping someone else will pay more for it tomorrow. That’s speculative trading, which can turn every price movement into a potential stampede. Since so many people are betting on momentum, once that reverses, everyone rushes for the exits.
Investor sentiment in Bitcoin also remains closely tied to the cryptocurrency news cycle, which runs 24 hours a day, seven days a week, like the crypto markets. Even seemingly minor news updates can have a major impact on the price of Bitcoin, while significant developments—such as the 2024 U.S. election or a regulatory update from the SEC—can cause dramatic shifts.
Unlike the stock markets, crypto exchanges never close, which means there’s no pause button, no cooling-off period—just the constant potential for volatility from every headline, rumor, and Reddit post.
Important
Investors often treat crypto and crypto exchange-traded funds (ETFs) like the riskiest chips on the table, cashing them out first to cover losses elsewhere or move to safer ground when the broader market dips.
Bitcoin’s Regulatory Risks
More than 15 years after the launch of crypto, governments worldwide disagree on whether and how to regulate these currencies. They even differ over how to define it. Is Bitcoin a commodity like gold? A currency like any other traded in the foreign exchange markets? Property like real estate? A security like a stock?
In the U.S., the SEC and the Commodity Futures Trading Commission primarily oversee cryptocurrency regulations, which can change at a fast clip. For example, the SEC’s greenlight for crypto ETFs this decade significantly boosted demand for Bitcoin, while the GENIUS Act, passed in July 2025, reshaped the stablecoin space, with knock-on effects for cryptocurrencies like Bitcoin.
Additionally, ongoing legal challenges to existing regulations mean the rules governing crypto are still very much a work in progress. Every court ruling, every new law, every agency announcement adds another layer of uncertainty—and uncertainty is volatility’s best friend.
How You Can Prepare for Bitcoin’s Volatility
Bitcoin’s wild price swings are not automatically bad for you. While volatility can be nerve-wracking, those same swings create prospects for capturing gains. If you’re nimble enough to buy low and sell high—or disciplined enough to keep buying regardless of price—volatility can actually work in your favor.
Traditional investment strategies can help you stay grounded even when Bitcoin’s price swings up and down:
- Dollar-cost averaging, where you invest a fixed amount at regular intervals (like after each paycheck), regardless of price, can smooth out the bumps over time and prevent you from trying to time the market, which is often the worst move for everyday investors.
- Position sizing, where you limit crypto to a small percentage of your overall portfolio, can keep a Bitcoin crash from ruining your retirement plans.
The trick is to have your Bitcoin strategy in place before the volatility hits, not scramble to create one while Bitcoin’s price is cratering or shooting to the moon.
However, these strategies work best for, say, investing in S&P 500 indexes since the stock market has been up over time. But if you don’t have the same conviction for Bitcoin’s long-term prospects, the crypto roller coaster might not be for you.
