November 20, 2025

Bitcoin Dives Below $100,000: What’s Behind the Crypto Market Crash and Its Impact on Investors?

Cryptocurrency Market Sees Sudden Drop as Bitcoin Falls Below $100,000

The cryptocurrency market is experiencing a significant downturn, with Bitcoin dropping below $100,000 for the first time in about six months. Ethereum and Solana have also seen significant losses, falling by 11% and 9% respectively over the past 24 hours. The total cryptocurrency market cap has dropped to almost $3.42 trillion.

Bitcoin’s Price Plunge: Two Key Factors Contributing to Market Volatility

The sudden drop in Bitcoin’s price is largely attributed to two key factors: the uncertainty surrounding the Federal Reserve’s decision on a December rate cut and the lingering effects of the October 10 "Black Friday" event. The Crypto Fear and Greed Index, which gauges market sentiment, currently shows "Extreme Fear."

Rate Cut Uncertainty

The Federal Reserve’s decision on a December rate cut is having a significant impact on the cryptocurrency market. While the Fed did go ahead with a rate cut in October, Chairman Jerome Powell has warned that another rate cut is not a "forgone conclusion." This uncertainty is contributing to a growing risk-off sentiment among investors, which is affecting crypto, tech stocks, and other retail investor favorites.

The Aftermath of Black Friday

The October 10 "Black Friday" event left many investors reeling as over $19 billion in cryptocurrency was wiped out in a single day. A surprise tariff-related social media post from President Donald Trump caused prices to fall when many were betting on a continued rally. The high levels of margin and leverage in the market at the time turned what might have been a slight drop into a dramatic cascade of liquidations.

The Impact on Investors: Coping with Volatility

As cryptocurrency investors often know, cryptocurrencies are inherently risky investments. However, the actual experience of seeing a 20% drop in a month can be unnerving. For those invested in Bitcoin or other cryptocurrencies, here are some strategies to help cope with the volatility:

Holding On and Reviewing Investment Thesis

Investing decisions made out of panic rarely pan out well. If you bought Bitcoin as part of a long-term investment strategy, remind yourself why you purchased it and how it fits into your wider portfolio.

  • Many investors have turned to Bitcoin for its potential as digital gold or as a form of international remittance.

  • Remembering that Bitcoin’s price can be volatile but tends to recover over time can provide comfort during periods of decline.

  • Considering Dollar-Cost Averaging

    • What is dollar-cost averaging? It involves spreading investments out over time by buying at fixed intervals, reducing the risk of timing market movements and taking some emotion out of investing.
    • Many investors find dollar-cost averaging helpful in managing cryptocurrency’s volatility.

  • Making regular purchases reduces the impact of price fluctuations on your overall investment.

  • Almost 85% of investors surveyed last year used dollar-cost averaging.

Allocations and Diversification

One effective strategy to manage risk is by balancing cryptocurrency’s volatility through diversification. Considering how much of your portfolio you want to allocate to risky assets, depending on your investment goals and horizon.

  • If crypto makes up 5% of a balanced portfolio (including stocks, bonds, real estate, and perhaps even gold), extreme price swings become more manageable.
  • Bitcoin dipped below $100,000 briefly but is currently around $104,000. Holding above this psychological mark might boost confidence in the market.

Should You Buy Stock in Bitcoin Right Now?

Before investing in Bitcoin, consider alternative opportunities that might offer higher returns. The Motley Fool’s Stock Advisor service has identified 10 stocks they believe will outperform in the coming years, none of which include Bitcoin.

Conclusion

The sudden drop in Bitcoin and the entire cryptocurrency market has left investors reeling. While it may seem daunting to navigate such volatility, understanding key factors like rate cut uncertainty and the aftermath of Black Friday can help investors make more informed decisions. Strategies like dollar-cost averaging, diversifying your portfolio, and reviewing investment thesis can also be useful in managing risk.

Embracing a balanced approach and keeping an open mind are crucial in navigating market fluctuations. As always, individual financial goals and time horizons should guide investment decisions.