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Volatility Meaning

Volatility is a statistical measure of the dispersion of returns for a given asset, typically expressed as the standard deviation or variance of price changes. In financial markets, high volatility indicates that prices fluctuate widely over short periods, while low volatility suggests more stable pricing.

Cryptocurrency markets are known for their high volatility due to speculative trading, evolving regulatory landscapes, and relatively thin order books compared with traditional markets. Volatility is both a risk and an opportunity: traders may profit from price swings, but investors face greater uncertainty.

Tools like implied volatility, historical volatility, and volatility indexes help market participants gauge sentiment and adjust strategies accordingly.

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