Volatility Regime

Definition ∞ A Volatility Regime describes a distinct period in financial markets characterized by a specific level and pattern of price fluctuations. Markets can transition between regimes of high, low, or moderate volatility. Recognizing the prevailing regime helps investors and traders adjust their strategies. These periods are often influenced by macroeconomic factors or specific market events.
Context ∞ In cryptocurrency markets, identifying the current volatility regime is a critical aspect of risk management and trading strategy. News analyses often highlight shifts in volatility, such as a transition from a low volatility period to a high one, indicating potential market instability or opportunities. Understanding these regimes is important for interpreting market behavior and making informed decisions.