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Crypto Glossary/Volatility

Volatility

The rate at which the price of a cryptocurrency or digital asset changes over a specific period of time.

Crypto markets are highly volatile compared to traditional markets. This means the rate of change of cryptocurrency prices is very high or fast, resulting in sharp surges and drops within short periods of time.

Volatility is typically measured through standard deviation from the annualized returns of an asset over a specific period of time. It is also dependent on the size of a market, since the more volume required to move a mature market, the lower its volatility.

The volatility of crypto markets is one of the factors that draw traders to it, since it provides more opportunities to trade compared to a slower market.

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