What is the relationship between volatility and standard deviation in the cryptocurrency market?

1 answers

• CurranOCJan 26, 2024 · 2 years ago
  In the cryptocurrency market, volatility and standard deviation are closely intertwined. Volatility refers to the rapid and significant price changes that cryptocurrencies experience, while standard deviation measures the extent to which these price changes deviate from the average. When the cryptocurrency market is highly volatile, with frequent and large price swings, the standard deviation tends to be higher. This indicates that the price fluctuations are more dispersed and less predictable. Conversely, when the market is less volatile, with smaller and less frequent price movements, the standard deviation is lower, indicating more stable and predictable price patterns. It's important for traders and investors to understand the relationship between volatility and standard deviation in order to assess the risk and potential returns of different cryptocurrencies.
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