Bitcoin price has fallen by more than $30,000 since last month – why is it so volatile?

This fall alone, the price of Bitcoin, the leading cryptocurrency, fell by more than a quarter (28%), falling below $90,000 before rebounding by about 4%. At 2pm EST on Tuesday, the price stood at $93,848. But back on October 7, the amount was more than $124,000, a difference of more than $30,000.

The rapid price shifts are a painful reminder that the world’s most popular cryptocurrency remains astonishingly volatile, swinging in everything from whale trades to weekend headlines.

This hit was particularly surprising as many investors expected a sustained rally, thanks to crypto-friendly management and relaxed oversight from the US Securities and Exchange Commission (SEC). But nearly 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?

When the market sneezes, Bitcoin catches a cold

Bitcoin price fluctuations are due to fundamental economic factors: supply and demand. There will only be 21 million Bitcoins in existence, and surprisingly a small number of accounts control a large portion 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 quickly collapse.

To prevent complete collapses, exchanges often limit the amount of Bitcoin that can be liquidated in a single day. This may seem like it provides you with some coverage against sudden losses, but it could mean that you could watch your wallet bleed while you are unable to sell, stuck holding Bitcoins that you cannot unload because whales hit the daily limit first.

Additionally, it’s not just cryptocurrency prices that you need to keep an eye on. Stumbles in the markets have increasingly led to selling, as cryptocurrencies tend to be the first assets investors dump when fear sets in. This is because cryptocurrencies are viewed as a “risk” asset – something you hold when you feel confident, not when you are preparing your defenses for a downturn. So, when the market declines, as we saw in the mid-2020s, crypto losses may be greater.

Hype, fear and news fuel cryptocurrency trading 24/7

Bitcoin price not only responds to fundamentals, it lives and dies by hype and speculation. While some cryptocurrency investors may buy Bitcoin because they believe it will revolutionize finance, many are investing because they hope someone else will pay more for it tomorrow. This is speculative trading, which can turn every price movement into a potential rally. Since so many people bet on momentum, once that reverses, everyone rushes for the exit.

Bitcoin investor sentiment also remains closely tied to the cryptocurrency news cycle, which, like cryptocurrency markets, lasts 24 hours a day, seven days a week. Even seemingly minor news updates can have a significant impact on Bitcoin’s price, while important developments – such as the 2024 US elections or a regulatory update from the Securities and Exchange Commission – can cause dramatic shifts.

Unlike stock markets, cryptocurrency exchanges never close, meaning there’s no pause button, no cooling off period — just the constant potential for volatility from every headline, rumor, and Reddit post.

Bitcoin regulatory risks

More than 15 years after the launch of cryptocurrencies, governments around the world disagree on whether and how to regulate these currencies. They even disagree on how to define it. Is Bitcoin a commodity like gold? A currency like any other currency traded in foreign exchange markets? Property like real estate? Security like stocks?

In the United States, the Securities and Exchange Commission and the Commodity Futures Trading Commission primarily oversee cryptocurrency regulations, which can change quickly. For example, the SEC’s green light for cryptocurrency ETFs this decade significantly boosted demand for Bitcoin, while the GENIUS Act, passed in July 2025, reshaped the stablecoin space, with knock-on effects on cryptocurrencies like Bitcoin.

Additionally, ongoing legal challenges to existing regulations mean that the rules governing cryptocurrencies 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 can you prepare for Bitcoin volatility?

Wild swings in Bitcoin prices aren’t automatically bad for you. While volatility can be nerve-wracking, these same volatility create potential for gains. If you’re smart enough to buy low and sell high — or disciplined enough to keep buying regardless of the price — volatility can work in your favor.

Traditional investment strategies can help you stay steady even when Bitcoin’s price fluctuates up and down:

• Average cost in dollarswhere you invest a fixed amount at regular intervals (such as after each paycheck), regardless of the price, can smooth out bumps over time and prevent you from trying to time the market, which is often the worst move for average investors.
• Position sizingwhere limiting cryptocurrencies to a small percentage of your overall portfolio, can prevent the Bitcoin collapse from destroying your retirement plans.

The trick is to create your Bitcoin strategy before volatility hits, not scrambling to create one while the price of Bitcoin collapses or shoots to the moon.

However, these strategies work better, for example, to invest in the S&P 500 indices given the stock market’s rise over time. But if you don’t have the same conviction in Bitcoin’s long-term prospects, the cryptocurrency roller coaster may not be for you.