What is volatility?

An asset that swings 5 percent a day is more volatile than one that swings 1 percent, even if both end the month where they started. Traders use it to size positions and to decide how much leverage a market can take.

There are two versions. Realized volatility is measured from past prices. Implied volatility is backed out of option prices and shows what the market expects. Both are annualized, and since crypto trades every day, daily volatility gets multiplied by the square root of 365, about 19.1. Daily volatility of 3 percent works out to roughly 57 percent a year.

Crypto is far more volatile than large stocks, and small tokens far more than Bitcoin. Volatility also clusters. Calm weeks follow calm weeks, and violent days come in bunches, usually around macro data or a liquidation cascade.

This is where leverage bites. Take a hypothetical 20x position. A move of less than 5 percent against it is enough to get it liquidated. On a token that moves 5 percent on a normal Tuesday, ordinary noise will take that position out. The same leverage on a calmer asset might last for weeks.

Also called: price volatility, realized volatility, implied volatility.

The Prices widget shows each asset's 24h move, its 24h low-to-high range and a 7-day sparkline, and the Price chart widget draws 1D, 7D and 30D candles, so you can see how wide a market is swinging. There is no computed volatility number.

• Price chart
• Prices

• Wikipediaen.wikipedia.org

• Candlestick chart
• Leverage
• Liquidation price
• Weekend gap