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How to Navigate a Crypto Crash
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How to Navigate a Crypto Crash
Crypto is a volatile asset, prone to sudden drops — and increases — in price. Investors should understand the risks and diversify their portfolios.
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Lead Writer/Spokesperson
Expertise Cryptocurrency investing alternative assets taxesAndy Rosen is a former NerdWallet writer who covered taxes, cryptocurrency investing and alternative assets. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas. In these roles, Andy has seen cryptocurrency develop from an experimental dark-web technology into an accepted part of the global financial system. He is based in Boston.
Andy Rosen is a former NerdWallet writer who covered taxes, cryptocurrency investing and alternative assets. He has more than 15 years of experience as a reporter and editor covering business, government, law enforcement and the intersection between money and ideas. In these roles, Andy has seen cryptocurrency develop from an experimental dark-web technology into an accepted part of the global financial system. He is based in Boston. Published in Lead Writer/Spokesperson + more + more
Managing Editor
12 years of experience Expertise Brokerage accounts stock market cryptocurrencyChris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet.
Chris Davis is a Managing Editor on the Investing team. He has passed the Series 65 (Uniform Investment Adviser Law Exam) and covered the stock market, investing strategies, investment accounts and cryptocurrency. His work has appeared in The Associated Press, The Washington Post, MSN, Yahoo Finance, MarketWatch, Newsday and TheStreet. Published in Managing Editor + more + more
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8 years of experience Expertise Personal financeKurt Woock started writing for NerdWallet in 2021. Prior to joining NerdWallet, Kurt was a writer and educator for Colorado PERA, a retirement system for public employees. Before that he was a legislative editor for the Colorado General Assembly. Kurt has a B.A. from Valparaiso University and an M.A. in journalism from the University of Missouri-Columbia. He lives in Chicago.
Kurt Woock started writing for NerdWallet in 2021. Prior to joining NerdWallet, Kurt was a writer and educator for Colorado PERA, a retirement system for public employees. Before that he was a legislative editor for the Colorado General Assembly. Kurt has a B.A. from Valparaiso University and an M.A. in journalism from the University of Missouri-Columbia. He lives in Chicago. Published in Lead Writer & Content Strategist + more + more Nerdy takeawaysCrypto is a volatile asset in general, prone to significant price swings.
Some crypto crashes are because of systemic issues within crypto, such as the collapse of FTX in 2022.
Other times, macroeconomic factors such as interest rates and inflation can push values down.
After a long string of positive news — and rising prices — the noise around crypto has taken a more negative tone recently. At the time of last update, Bitcoin is down almost 30% from its October 2025 all-time high of more than $124,000.
After a long string of positive news — and rising prices — the noise around crypto has taken a more negative tone recently. At the time of last update, Bitcoin is down almost 30% from its October 2025 all-time high of more than $124,000.But Bitcoin is known for volatility and quick crashes, as is the crypto market as a whole. Given that track record, investors should always be prepared for wild price swings.
But Bitcoin is known for volatility and quick crashes, as is the crypto market as a whole. Given that track record, investors should always be prepared for wild price swings.Though the factors driving every crypto crash are different, it can be helpful to remember a few established investing principles, like choosing how much of your overall portfolio should be invested in crypto and remembering why you invested in the first place. Here's a rundown of a few of the factors that have driven uncertainty and volatility in the crypto markets, and what investors can do to protect themselves.
Though the factors driving every crypto crash are different, it can be helpful to remember a few established investing principles, like choosing how much of your overall portfolio should be invested in crypto and remembering why you invested in the first place. Here's a rundown of a few of the factors that have driven uncertainty and volatility in the crypto markets, and what investors can do to protect themselves.» Learn more: How to buy cryptocurrency
» Learn more: » Learn more: How to buy cryptocurrencyWhat can cause a crypto crash?
What can cause a crypto crash?Crypto prices can be dramatically affected by major industry crises, such as specific exchanges or coins collapsing. They can also sink with higher interest rates, rising inflation and other macroeconomic factors that can affect how confident people feel investing their money in risky alternative assets.
Crypto prices can be dramatically affected by major industry crises, such as specific exchanges or coins collapsing. They can also sink with higher interest rates, rising inflation and other macroeconomic factors that can affect how confident people feel investing their money in risky alternative assets.Regulatory factors and financial enforcement actions like those carried out by the SEC can also affect the market. And sometimes, crypto crashes are simply a pullback from a previous period of excessive euphoria and price increases.
Regulatory factors and financial enforcement actions like those carried out by the SEC can also affect the market. And sometimes, crypto crashes are simply a pullback from a previous period of excessive euphoria and price increases.When prices fall rapidly, that can compound the pressure on the market by forcing some investors to free up cash so they can meet other obligations.
When prices fall rapidly, that can compound the pressure on the market by forcing some investors to free up cash so they can meet other obligations.In the case of the collapse of crypto exchange FTX in 2022, the impact to the market was enormous. The FTX crash didn't just affect FTX, but also cryptocurrencies FTX heavily invested in (such as Solana) and firms FTX did business with.
In the case of the collapse of crypto exchange FTX in 2022, the impact to the market was enormous. The FTX crash didn't just affect FTX, but also cryptocurrencies FTX heavily invested in (such as Solana) and firms FTX did business with.Webull
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Learn More Learn More Learn MoreWhy is crypto crashing right now?
Why is crypto crashing right now?The causes of some crashes, such as Bitcoin's ongoing plunge below the six-figure mark in late 2025, are harder to pinpoint.
The causes of some crashes, such as Bitcoin's ongoing plunge below the six-figure mark in late 2025, are harder to pinpoint.General market volatility (caused by tariffs, high interest rates and recession fears) likely plays a role in the current downturn, but it may also simply be a pullback from the exuberance of Bitcoin's post-2024-election highs.
General market volatility (caused by tariffs, high interest rates and recession fears) likely plays a role in the current downturn, but it may also simply be a pullback from the exuberance of Bitcoin's post-2024-election highs.» Is Bitcoin a good investment? Learn about the pros and cons
» Is Bitcoin a good investment? » Is Bitcoin a good investment? Learn about the pros and consHas crypto crashed before?
Has crypto crashed before?Yes, multiple times. For example, Bitcoin recorded a previous record high of nearly $20,000 in December 2017, but by December 2018 was trading below $3,500. It reached a high of about $69,000 in November 2021 and in the year after, dropped by more than 75%.
Yes, multiple times. For example, Bitcoin recorded a previous record high of nearly $20,000 in December 2017, but by December 2018 was trading below $3,500. It reached a high of about $69,000 in November 2021 and in the year after, dropped by more than 75%.Bitcoin first reached the $100,000 mark in late 2024, but pulled back by about 20% between January and April 2025 amid broad volatility in financial markets caused by new tariffs. It recovered and regained the six-figure mark earlier this year, hitting an all-time high slightly below $125,000, before pitching down into a steeper (and ongoing) crash in late 2025.
Bitcoin first reached the $100,000 mark in late 2024, but pulled back by about 20% between January and April 2025 amid broad volatility in financial markets caused by new tariffs. It recovered and regained the six-figure mark earlier this year, hitting an all-time high slightly below $125,000, before pitching down into a steeper (and ongoing) crash in late 2025.» Learn more: Will Bitcoin go back up?
» Learn more: » Learn more: Will Bitcoin go back up?I’m worried about keeping my crypto with an exchange. What should I do?
I’m worried about keeping my crypto with an exchange. What should I do?Consider moving your digital assets to a separate crypto wallet. Most exchanges allow you to transfer assets to these wallets, which can be online (on a separate platform) or offline (on a thumb drive with added security features).
Consider moving your digital assets to a separate crypto wallet. Most exchanges allow you to transfer assets to these wallets, which can be online (on a separate platform) or offline (on a thumb drive with added security features).What are the risks of buying crypto?
What are the risks of buying crypto?When crypto is crashing, someone who's been intrigued from the sideline might think this is the time to get in and "buy low." But while prices can recover — and have done so in the past — the recovery could take months or years.
When crypto is crashing, someone who's been intrigued from the sideline might think this is the time to get in and "buy low." But while prices can recover — and have done so in the past — the recovery could take months or years.Conditions might also get worse before they get better. Following a major crash, prices could also continue to go down for some time, especially if the event causes financial troubles for other exchanges or currencies.
Conditions might also get worse before they get better. Following a major crash, prices could also continue to go down for some time, especially if the event causes financial troubles for other exchanges or currencies.Unlike traditional financial exchanges, crypto markets don't have circuit breakers, which automatically pause trading when prices dive too quickly. This means prices could plunge much faster than traditional investments.
Unlike traditional financial exchanges, crypto markets don't have circuit breakers, which automatically pause trading when prices dive too quickly. This means prices could plunge much faster than traditional investments.Another distinction between crypto and securities such as stocks is that crypto trades around the clock. If you're worried about swings in value, you might find it hard to sleep.
Another distinction between crypto and securities such as stocks is that crypto trades around the clock. If you're worried about swings in value, you might find it hard to sleep.There's also a chance any given cryptocurrency could go to zero, or close to zero, following a massive sell-off. Such was the case with Terra and Luna.
There's also a chance any given cryptocurrency could go to zero, or close to zero, following a massive sell-off. Such was the case with Terra and Luna.How does crypto fit into your portfolio?
How does crypto fit into your portfolio?As a rule of thumb, don't invest more than you can afford to lose in risky assets like crypto. It's recommended not to invest more than 10% of your portfolio in such assets.
As a rule of thumb, don't invest more than you can afford to lose in risky assets like crypto. It's recommended not to invest more than 10% of your portfolio in such assets. ADEarn 3.71% APY by investing in U.S. Treasury Bills*
Earn 3.71 % APY by investing in U.S. Treasury Bills* Maximize your cash by investing in low-risk, government-backed T-Bills. All the work is done for you — just make the deposit and watch your money grow. Learn More *Rate when held to maturity. Rate shown is subject to price fluctuations.Disclosure: The author Andy Rosen owned BTC at the time of publication.
Disclosure: The author Andy Rosen owned BTC at the time of publication. Disclosure: The author Andy Rosen owned BTC at the time of publication. About the authors Andy Rosen Andy Rosen Andy Rosen is a former NerdWallet writer focused on cryptocurrency and alternative investments. He has more than 15 years of journalism experience as a reporter and editor at organizations including The Boston Globe and The Baltimore Sun. See full bio. Kurt Woock Kurt Woock Kurt Woock is a writer at NerdWallet. See full bio.Helpful resources
Helpful resources Cryptocurrency Basics: Pros, Cons and How It Works How to Buy Bitcoin (BTC): Quick-Start Guide What Is Bitcoin? Definition, Basics & How to Use Crypto staking: What it is, how it works, calculator More like this Investment Basics Investing Cryptocurrency The 8 Best Crypto Exchanges, Platforms & Apps for 2026 The best crypto app for you will depend heavily on your investing or trading goals and level of experience with cryptocurrencies. We break down all of that to help you choose. Chris Davis Coinbase vs. Robinhood: 2026 Comparison When it comes to buying cryptocurrencies, Coinbase has the upper hand for a few reasons. Andy Rosen How to Get a Crypto Wallet Setting up a crypto wallet might seem intimidating if you're new to crypto, but it only takes a few minutes. Dalia Ramirez