Fiat volatility describes the degree of price fluctuation observed in government-issued currencies when compared to other assets or currencies. These movements are influenced by economic policies, geopolitical developments, and overall market sentiment. It reflects the purchasing power stability of a national currency.
Context
Fiat volatility directly impacts the perceived stability and utility of stablecoins and other digital assets designed to offer a hedge against traditional currency instability. During periods of significant national currency price swings, investors may seek digital assets as an alternative store of value. This dynamic influences capital flows between conventional financial markets and the digital asset economy, often appearing in news analyses of market trends.
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