Buying crypto used to require special apps and technical know-how. Now, nearly anyone can invest through ordinary brokerage accounts using funds designed to hold crypto. Known as spotexchange-traded funds, their introduction opened the door to millions of new investors. But ease of access has a downside. Because these fundstrade throughout the day—just likestocks—investors can rush in or out quickly whenmarkets turn shaky. The dynamic tempo in trading means crypto often rises or falls with the same waves of optimism and worry that move other risky investments.

A large share of crypto trading uses borrowed money.Traders take out short-term loans to increase the potential for gains, but even a small drop in price of their investments cantrigger automatic selling to prevent bigger losses. Those automatic sell-offs push prices down further, which can trigger even more selling. And because borrowing lets traders make larger bets than they could with their own money, both the buying and the selling become bigger, magnifying price movements in both directions.

Although crypto began as a grassroots alternative to traditional finance,large institutions and professional traders now hold significant amounts of it. Their trades are so large, often involving millions of dollars in a single transaction, that when they buy in, prices can surge. When they step back to take profits, react to concerns aboutinterest rates, or pause duringregulatory delays, prices can fall sharply.