Volatility measures how much an asset’s price moves over time. A highly volatile asset can rise or fall sharply in a short period.
How It Works
Traders often measure volatility using historical price changes or implied volatility from options markets. High volatility means larger price swings; low volatility means calmer trading conditions.
Crypto assets are known for high volatility because the market trades 24/7, liquidity can shift quickly, and sentiment can change fast.
Why It Matters In Crypto
Volatility matters because it affects risk management, position sizing, liquidation risk, and investor behavior. High volatility can create opportunity, but it can also lead to large losses.
A simple example: if a token moves 15% in one day, traders may see opportunity, but leveraged positions may face liquidation if the move goes against them.