Price Fluctuation

Definition ∞ Price fluctuation refers to the continuous and often unpredictable changes in the market value of a digital asset over time. These movements can be minor or substantial, reflecting the dynamic interplay of supply, demand, market sentiment, and external economic factors. Digital assets are particularly known for their high degree of price volatility compared to traditional assets. Understanding these variations is essential for risk assessment and trading strategies.
Context ∞ High price fluctuation is a defining characteristic of the digital asset market, presenting both opportunities for traders and considerable risks for investors. Discussions frequently address the underlying causes, such as liquidity constraints, speculative trading, and evolving regulatory landscapes. Market participants often monitor various indicators and news events to predict potential price movements and manage their exposures.