If the A invests $1000 in bitcoin, then the next day the price of bitcoin drops dramatically and the A loses $1000, which makes me curious, where does the $1000 A money go?
That $ 1000 just got liquidated in the market and to fulfil the dropped market cap it gets distributed over it. Most of the time bitcoin drops in value when people are selling out heavily. When they sell the money gets into their wallet. That is they are converting their bitcoin to fiat and in the process they are taking out the investments and growing the supply and reducing the demand of bitcoin. Thus it looses the market cap and value in the process. Now how much from $ 1000 will loose is dependent upon how much value bitcoin reduced.