Definition ∞ Currency Volatility measures the degree of variation in a currency’s price over a specific period. High volatility indicates rapid and unpredictable price swings, while low volatility suggests more stable price movements. This metric is a key consideration for investors and traders, particularly in the cryptocurrency markets. It impacts risk assessment and investment strategies significantly.
Context ∞ Cryptocurrency markets are frequently characterized by notable currency volatility, which often influences market sentiment and regulatory discussions. Economic factors, technological developments, and geopolitical events frequently contribute to these price fluctuations. Ongoing efforts in the digital asset space include the development of stablecoins and other mechanisms designed to mitigate the effects of high volatility.
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