Token Volatility

Definition ∞ Token volatility describes the degree of price fluctuation exhibited by a digital token over a specific period. It quantifies how rapidly and significantly a token’s market value changes, often in response to market sentiment, news events, or underlying protocol developments. High volatility indicates large price swings, while low volatility suggests more stable pricing. This metric is a key indicator of risk and potential return for digital assets.
Context ∞ Token volatility is a constant theme in crypto news, influencing investment decisions, trading strategies, and regulatory discussions. Stablecoins aim to mitigate this volatility, while many other digital assets are known for their rapid price movements. Understanding token volatility is essential for assessing the risk associated with various digital assets and for comprehending market dynamics reported in financial news.