Volatility refers to changes in the price of an asset, such as cryptocurrency or stock. Low volatility means the price stays relatively stable over time, and high volatility means there can be more extreme sudden price movements in either direction.
Cryptocurrencies are known for their high volatility, but what causes it? Many of the same factors that cause volatility in the stock market also apply to cryptocurrencies, such as:
News events and speculation, including talk of government regulations or security breaches
Uncertainty of future value
Less liquidity in the market
Since crypto is a relatively new market, it takes less input from any of those factors to cause major swings in a cryptocurrency’s value. We’ve added Volatility Reminders to the cryptos we offer so you can make decisions with context.
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