Asset volatility quantifies the degree of price fluctuation for a financial asset over a specific period. In digital asset markets, it measures how rapidly and significantly a cryptocurrency’s price changes. Higher volatility indicates greater price uncertainty, which can present both increased risk and potential for substantial gains.
Context
Digital asset markets frequently exhibit higher asset volatility compared to traditional financial markets due to their nascent stage, smaller market capitalization, and susceptibility to news events. Understanding this characteristic is crucial for risk management and investment strategy formulation in crypto. Ongoing discussions address how institutional adoption and regulatory clarity might affect the volatility profiles of various digital assets.
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