As bitcoin dropped by 50% late Tuesday afternoon, my phone rang. It was my friend Jordan, and I shook my head as I took his call. I knew he was wondering if he should sell again.

It's the big mistake he keeps making … and he hasn't learned from it yet.

In 2017, he bought bitcoin at $1,250, $2,800, $7,500 and $14,000. That's an average cost of $6,387, or about half of bitcoin's current price of $12,000.

But here's the crazy part: He's down on his bitcoin investments!

That's right — even with an average cost significantly below bitcoin's current price, Jordan still managed to lose money … in an asset that skyrocketed 1,400% last year.

Now, you might be wondering how this is possible.

It's possible because he lets volatility shake him out of his positions. He gets out at exactly the wrong times, when if he just listened to the advice I'm about to tell you today …. he'd be up big in the past year.

The Ups and Downs of Bitcoin

Most people don't realize that not sticking to a plan has eaten into many crypto investors' profits.

Any casual observer would think investors are raking it in! All they had to do was buy some bitcoin at any point last year, hold on to it and cash out However, if you look past the staggering returns, you'll notice that bitcoin is one of the most volatile assets in history. Take a look at some of these spectacular bitcoin peak-to-trough drawdowns over the past year:

One defining characteristic of volatile markets is their tendency to shake out the weak hands before the next move higher. I outlined this concept last summer in an article for Investopedia titled: “Bitcoin's Bloody Sunday Has Weeded Out the Weaklings.” And that's what's causing some bitcoin investors, like Jordan, to miss out on massive profits.