Definition ∞ A Volatility Spike denotes a sudden and significant increase in the rate and magnitude of price fluctuations for a financial asset over a short period. This rapid escalation in price variability indicates heightened market uncertainty or a strong reaction to new information. Volatility spikes are often characterized by sharp price movements in either direction, leading to unpredictable market conditions. They can create both opportunities and substantial risks for market participants.
Context ∞ In cryptocurrency news, volatility spikes are a common occurrence, frequently driven by macroeconomic announcements, regulatory developments, or major protocol updates. These events can trigger rapid liquidations in leveraged positions, further amplifying price movements across digital asset exchanges. Understanding the catalysts behind such spikes is crucial for investors and traders seeking to navigate the often turbulent digital asset landscape.
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