Volatility trading involves executing financial strategies designed to profit from fluctuations in the price of digital assets. Traders engaging in this practice seek to capitalize on significant price movements, regardless of direction, using various instruments like options or futures. This approach requires careful risk management due to market unpredictability.
Context
Volatility trading is a prevalent activity in cryptocurrency markets due to the typically high price swings of digital assets compared to traditional markets. Discussions often highlight the tools and analytical models used to predict and react to market movements. Future developments will likely involve more sophisticated derivatives and automated trading algorithms to manage and exploit market variability.
The $1.2 trillion volume milestone confirms that on-chain derivatives infrastructure now offers superior resilience and capital efficiency during extreme volatility.
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