Definition ∞ Historical volatility measures how much a digital asset’s price has fluctuated over a past period. This metric quantifies the degree of price variation for a cryptocurrency or token based on its past trading data, typically expressed as a standard deviation of returns. It serves as an empirical indicator of an asset’s past price instability, providing insight into its typical range of movement. High historical volatility suggests significant past price swings, while low historical volatility indicates more stable price action. This statistical measure is a key component in risk assessment and quantitative trading strategies.
Context ∞ Crypto news frequently references historical volatility when analyzing market trends, evaluating investment risk, or discussing option pricing. A common discussion point involves comparing historical volatility with implied volatility to gauge market expectations for future price swings. Understanding this metric helps investors contextualize past price behavior and anticipate potential future movements, although past performance does not dictate future outcomes.
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