Stochastic Processes

Definition ∞ Stochastic processes are mathematical models that describe systems evolving randomly over time. Their future behavior cannot be precisely predicted but can be analyzed in terms of probabilities and statistical distributions. These models are widely applied in finance and other fields where uncertainty is a significant factor.
Context ∞ In the analysis of cryptocurrency markets and digital asset behavior, stochastic processes are employed to model price fluctuations, volatility, and other time-dependent phenomena. News reports may reference these models when discussing market predictions or risk assessments. The ongoing research focuses on refining these models to better account for the unique characteristics of digital asset markets.