Definition ∞ Short-term price risk refers to the potential for rapid and significant price fluctuations in digital assets over brief periods. This risk is driven by factors such as market sentiment shifts, unexpected news events, high leverage trading, or sudden liquidity changes. It makes assets susceptible to quick gains or losses, posing a particular challenge for traders with shorter time horizons. Understanding and managing short-term price risk is crucial for active participants in volatile markets.
Context ∞ Crypto news frequently highlights short-term price risk when reporting on market volatility or sudden price crashes. The presence of high leverage in derivative markets often amplifies this risk, leading to cascading liquidations. The ongoing discussion focuses on developing more robust risk management strategies and understanding the impact of macroeconomic events on immediate market movements.
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