Volatility
- Volatility measures how much and how quickly an asset's price moves over a given period, with high volatility meaning large, rapid swings and low volatility meaning steadier prices.
- It is usually estimated from the size of recent price changes and says nothing about direction, since an asset can be highly volatile while trending up, down or sideways.
- Volatility is a core measure of risk, and cryptocurrencies are known for being more volatile than most traditional assets due to factors like evolving adoption, thinner liquidity and round-the-clock trading.
Volatility measures how much and how quickly an asset’s price moves over a given period. High volatility means large, rapid swings in either direction; low volatility means steadier prices. Cryptocurrencies are known for being more volatile than most traditional assets.
How it works
Volatility is usually estimated from the size of recent price changes — the larger and more frequent the moves, the higher the figure. It says nothing about direction; an asset can be highly volatile while trending up, down or sideways. Crypto’s volatility comes from factors such as evolving adoption, thinner liquidity than major currencies, and round-the-clock global trading.
Why it matters
Volatility is a core measure of risk. It affects position sizing, the width of stop-losses, and the appeal of stablecoins as a place to wait out turbulence. Higher volatility means larger potential gains and larger potential losses.
Example
A coin that routinely moves 10% in a day is far more volatile than one that rarely moves 1%, even if both end the month unchanged.
Does high volatility mean the price is falling?
Why are cryptocurrencies so volatile?
How does volatility affect trading decisions?
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