Volatility Persistence

Definition ∞ Volatility persistence describes the tendency for periods of high or low price fluctuation in an asset to continue for extended durations. If an asset experiences high volatility today, it is statistically more probable to exhibit high volatility tomorrow, rather than suddenly becoming stable. This characteristic is common in financial markets, including digital assets, where price swings often cluster. It significantly impacts risk assessment and trading strategies.
Context ∞ Crypto news frequently discusses volatility persistence when analyzing market trends and risk profiles of digital assets. Analysts often point to this phenomenon to explain prolonged periods of erratic price movements or sustained periods of relative calm. Understanding volatility persistence helps investors and traders adjust their strategies and risk management approaches in the dynamic cryptocurrency market.