A volatility index measures the expected fluctuations in the price of an asset or market over a specific period. It serves as an indicator of market sentiment and perceived risk, often calculated using options prices. A higher index value suggests greater anticipated price swings.
Context
Volatility indices are closely watched metrics in financial markets, including the cryptocurrency sector, to gauge investor sentiment and potential risk. News often highlights movements in these indices as indicators of market uncertainty or impending price action. Understanding the behavior of volatility indices provides context for market reactions to news events and economic data.
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