What is Volatility?Volatility Definition-Volatility refers to the fluctuating price of an item over a certain period of time. An item may experience certain highs and lows during this period. The greater the difference between the high and low values, the higher the volatility of the item. Changes in price are noted on a daily basis and a yearly standard deviation of these changes is developed. This helps to predict the measure of volatility for that particular item. In the world of cryptocurrency, volatility is a measure of the risk involved in investing in a certain coin.
Volatility Definition in CryptocurrencyA highly volatile cryptocurrency is labeled as a risky buy, whereas a non-volatile cryptocurrency is less of a risk as its price is more stable and therefore predictable. There are several measures which can help to determine volatility. For example, if a country or financial institution adapts to the idea of a cryptocurrency or invest in it, then the cryptocurrency price is likely to rise. Likewise, the severing of ties could lead to the exact opposite. Here are some of the main reasons for the volatility of cryptocurrency as a whole.
- Lack of Intrinsic Value:
- Lack of Regulation