Volatility Spread

Definition ∞ Volatility spread refers to the difference between the implied volatility of cryptocurrency options and the realized (historical) volatility of the underlying digital asset. This spread reflects the market’s expectation of future price fluctuations compared to past movements. A widening spread often indicates increased uncertainty or anticipated market events.
Context ∞ In crypto news, the volatility spread is a crucial indicator for assessing market sentiment and predicting future price movements. A high or expanding spread suggests that options traders anticipate significant price swings, providing valuable context for risk management and trading strategies in the dynamic digital asset market.