Definition ∞ Low volatility describes a financial asset or market characterized by relatively small and infrequent price fluctuations over a given period. Assets exhibiting low volatility typically experience stable values, making them less prone to sudden, drastic changes. This characteristic is often sought by investors prioritizing capital preservation and predictable returns. It signifies a reduced level of price risk.
Context ∞ In the digital asset space, achieving low volatility is a primary objective for stablecoins, which are designed to maintain a fixed value relative to a fiat currency or other stable asset. The stability of these digital assets is crucial for facilitating everyday transactions and serving as a reliable medium of exchange within decentralized finance. News often reports on efforts to enhance stablecoin mechanisms to ensure consistent low volatility, addressing concerns about peg deviations and systemic risk.
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