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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Edited by other Updated Nov 20, 2025 NerdWallet is committed to editorial integrity.

The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

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 Nerdy takeaways 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. 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:

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. 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. 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. Advertisement

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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. 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?

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%. 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:

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).

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. 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. 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.

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. Disclosure: The author Andy Rosen owned BTC at the time of publication. Disclosure: The author Andy Rosen owned BTC at the time of publication. Explore more on About the authors Rosen 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 Woock 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 The 8 Best Crypto Exchanges, Platforms & Apps for 2026 By Chris Davis Coinbase vs. Robinhood: 2026 Comparison By Andy Rosen How to Get a Crypto Wallet By Dalia Ramirez