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Bitcoin has a long history of stomach-churning price swings, but the latest drop has shaken even committed believers.
After reaching highs above $126,000 in October, bitcoin tumbled below $70,000 in February — erasing all gains since President Donald Trump’s election (1). Though prices have rebounded slightly, the sharp reversal underscores how quickly fortunes can change in the crypto market.
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The sell-off has puzzled many investors who expected a crypto-friendly administration to boost prices. Bitcoin is often described as more stable than speculative memecoins, yet it has still proven vulnerable to shifts in demand, investor psychology and broader risk-off moves in financial markets, as CNN reports (2).
John Blank, chief equity strategist at Zacks Investment Research, told CNBC that bitcoin relies heavily on continued buying interest. When demand changes, prices can “explode up and down,” he warned, adding that bitcoin could fall as low as $40,000 if the downturn persists (3).
Here’s why this downturn is notable, what it means for bitcoin investors, and how to reduce risk when investing in crypto.
Why this downturn is drawing extra concern
Bitcoin crashes aren’t new. The cryptocurrency has experienced multiple boom-and-bust cycles since its launch, including major declines in 2018 and during the 2022 crypto winter. But this latest slump feels different for many investors.
Matt Hougan, chief investment officer at Bitwise Asset Management, described the current environment as “a full-bore, 2022-like, Leonardo-DiCaprio-in-The-Revenant-style crypto winter,” in comments reported by CNBC (4).
One key difference is how intertwined crypto has become with the broader financial system. The introduction of spot bitcoin ETFs has made it easier for everyday investors to gain exposure through traditional brokerage accounts.
At the same time, companies that hold large amounts of bitcoin on their balance sheets have tied crypto price swings more directly to stock markets, amplifying the ripple effects when prices fall, according to NBC News (5).
For some investors, however, the pain is far more personal — especially those who borrowed money to bet on bitcoin’s rise.
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Hedging risk with a financial advisor
The risks of leverage are front and center in a recent MarketWatch analysis, which highlights how some highly enthusiastic investors have borrowed billions against their crypto holdings.
“My retirement is completely in bitcoin,” one investor explained. She invested in Strategy, a bitcoin treasury company, and also borrowed against bitcoin using Firefish, a noncustodial peer-to-peer lending platform that puts investors’ bitcoin into escrow (6).
But when prices fall sharply, that kind of strategy can backfire. Borrowers may face margin calls or forced liquidations, potentially locking in losses at an inauspicious time.
That’s why it can be so valuable to work with a reliable financial advisor before taking the crypto plunge. A trusted expert can help you hedge risk and make decisions that fit your financial goals and timeline.
Finding the right advisor is simple with Advisor.com. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.
A professional advisor can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations — two key factors in building the right asset mix for your portfolio.
Through Advisor.com, you can schedule a free, no-obligation consultation to discuss your retirement goals and see how crypto could fit into your long-term financial plan.
Hold or sell? There’s no one-size-fits-all answer
For bitcoin holders trying to decide what to do next, there’s no universal right move.
Whether holding or selling makes sense depends on how crypto fits into your broader financial plan, how much volatility you can tolerate and whether you can afford to lose the money invested.
Unlike stocks or bonds, bitcoin doesn’t generate income. Returns depend entirely on price appreciation, which can be sudden.
Many financial advisors suggest limiting crypto exposure to roughly 1% to 5% of a diversified portfolio, and only for investors with strong financial foundations and a high tolerance for risk, according to guidance noted by CNBC (3).
Selling during a steep downturn can lock in losses, but continuing to hold also carries risk, especially for investors who are overexposed or relying on crypto for future income. Rather than reacting to short-term price swings, experts often encourage investors to reassess whether their crypto holdings still align with their long-term financial goals, risk tolerance and overall portfolio balance.
Swapping fiat for digital currency
For investors who are able to withstand some volatility, the long-term view for crypto is largely positive. According to a 2026 survey by Security.org, 53% of crypto owners report net gains over time, while just 21% have experienced net losses (7).
If you’re looking to diversify beyond traditional stocks and ETFs, Robinhood Crypto lets you buy and sell cryptocurrencies with as little as $1.
With some of the lowest trading costs on average in the U.S., you could end up with up to 2.7% more crypto compared to other platforms.
Robinhood Crypto makes it easy to make investing a habit with recurring buys on a fixed schedule, while giving you access to all your favorite coins — from Bitcoin and Ethereum to Solana, Dogecoin, XRP and more.
You can also transfer crypto securely to other wallets, set custom price alerts, track market trends and manage your portfolio all in one place.
Robinhood ensures the security of your cryptocurrency is a top priority, with the majority of coins held in offline cold storage. Robinhood also carries crime insurance against theft and cyber breaches, and 24/7 customer support is available if you need help.
Looking for another simple way to invest in digital currency — especially now that it’s priced at a discount?
SoFi’s easy-to-use DIY investing platform lets you buy stocks, ETFs and crypto with no commission fees and no account minimums.
SoFi is designed for both beginners and seasoned investors, with real-time investing news, curated content and the data you need to make smart decisions about the investments that matter most to you.
Plus for a limited time you can get up to $1,000 in stock when you fund a new account.
How some investors attempt to reduce crypto-related risks
If you decide to maintain or initiate crypto exposure, it’s wise to focus on caution rather than enthusiasm.
Investors can gain exposure by buying bitcoin directly through crypto exchanges, purchasing spot bitcoin ETFs through traditional brokerages or investing in crypto-related stocks.
These approaches differ in risk, oversight and complexity. Spot bitcoin ETFs, for example, allow investors to gain exposure through regulated brokerage accounts, avoiding the need to manage private keys or use offshore platforms.
Crypto-related stocks may add another layer of separation from direct price swings, though they still carry crypto-linked risk. Buying bitcoin directly can offer the most control, but also places full responsibility for security, storage and loss prevention on the investor.
Regardless of the method a person invests, safety matters. Never invest money you can’t afford to lose, and remember that crypto should not replace emergency savings, stocks or bonds.
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Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Barron’s (1); CNN (2); CNBC (3),(4); NBC News (5); MarketWatch (6); Security.org (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.