3 Key Factors To Consider for Holding or Selling Crypto Stock That Is Highly Volatile

Bitcoin is a highly volatile asset that can see regular 2% price swings in either direction. The digital currency started at around $93,000 in 2025 and promptly soared to above $100,000. The crypto dropped below $100,000 on Feb. 3 and shed approximately 7% of its value, only for Bitcoin to regain all of its losses the following day.

Bitcoin also lost approximately 13% of its value from Feb. 25 to the 28. It regained all of those losses by Mar. 2 due to President Donald Trump’s announcement of a U.S. Crypto Strategic Reserve.

While Bitcoin’s volatility is well documented, altcoins and crypto stocks can be even more volatile. Does it make sense to stomach the sharp price fluctuations, or is it better to abandon ship?

Find Out: 13 Cheap Cryptocurrencies With the Highest Potential Upside for You

These are three key factors each investor should consider when deciding if holding crypto stocks is worth it. Also learn about the best cryptocurrency for new investors.

The Trader’s Strategy

Becky Leighton is the content head at Coin Insider, a publication that covers cryptocurrencies. Leighton asked traders and investors to question their motivation for holding crypto stocks to ensure they have the right frame of mind.

“Did they buy the volatile stock to hold (HODLing) for long-term potential if they believe in the fundamentals of the asset? Or did they buy it for short-term gains?” Leighton remarked.

“If it’s short-term, then selling at the best price point is the right call. If long-term, then continuing to hold is the right call. Avoid making emotional decisions based on the market. Stick to the plan based on logic and data.”

Some days are more volatile than others. Investors should ask themselves if they can withstand a one-day 7% drop in their crypto stock’s value. Bitcoin has endured those types of drops plenty of times, and those declines are more common among altcoins. Granted, crypto assets can surge by more than 7% in a single day, but you have to take the good with the bad.

Leighton offered a solution for minimizing losses amid high volatility. Stop-loss levels can help traders exit trades instead of letting their emotions take them to deeper losses.

“The trader should look at whether they have set clear price targets for selling or taking profits,” the expert said. “Implementing stop-loss orders through a platform can limit the risk in case of a major drop.”

The Overall Market

Leighton also suggested monitoring financial markets to gauge long-term sentiment and how traders are currently feeling.

“Considering macroeconomic factors, such as regulatory news and what the leading cryptocurrencies are doing, can help direct a strategy around smaller or more volatile crypto. Short trades can be profitable when selling on a price swing,” she explained.

Staying on top of macro developments can give you an edge over traders who aren’t as attentive. Furthermore, paying attention to long-term trends can help you avoid making emotional decisions based on short-term news.

Risk Tolerance

Investing is personal due to varying risk tolerances. A young investor will have a different risk tolerance than an investor who is approaching retirement. Leighton encourages people to keep their risk tolerances in mind before deciding whether to hold or sell crypto stocks.

“Deciding whether to sell or hold in a volatile cryptocurrency can depend on the risk appetite of the trader,” she said. “If a trader is not comfortable with holding onto an asset that could drop in value quickly, then selling some of the cryptocurrency at the best price point is better; the profits can be put into a less volatile crypto or another asset.”

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This article originally appeared on GOBankingRates.com: 3 Key Factors To Consider for Holding or Selling Crypto Stock That Is Highly Volatile

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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