What is volatility? Why some prices swing more than others
By SendPay Business · · 2 min read
Volatility is how much and how quickly a price moves up and down. A volatile asset can rise or fall a long way in a short time. Volatility is not the same as losing money, but it makes the value of what you hold harder to predict.
How it is measured
Volatility is usually measured as the standard deviation of price changes over a period: the bigger the typical swing away from the average, the higher the volatility. It is often shown as a yearly percentage.
Why crypto swings more
- Smaller markets, so big trades move the price more.
- Prices driven mainly by demand and sentiment, not by earnings or interest rates.
- Trading around the clock, including weekends.
- Sudden news, such as rule changes or exchange failures.
Major currencies move less
Pairs such as the pound against the dollar usually move far less day to day than crypto, because they trade in huge volumes and are tied to whole economies. They can still jump on big news, such as surprise interest rate changes or elections.
Managing the risk
Common approaches include only putting in money you can afford to lose, spreading purchases over time (dollar-cost averaging), holding a mix of assets, and using stablecoins or cash for money you will need soon.
Where SendPay fits
SendPay platforms let your customers hold GBP, EUR and USD next to crypto they buy, sell and hold under your brand, with assets held with regulated partners.
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Build my platform →Questions people ask
How do I work out a trading strategy's expectancy?
Enter your win rate, average win and average loss.
Trading expectancy calculator →How do I work out an asset's volatility?
Paste its closing prices into our free calculator to get the daily and yearly figure.
Volatility calculator →How can I measure a market's volatility?
Our free ATR calculator works out the Average True Range from high, low and close prices, a common volatility measure.
ATR calculator →What is dollar-cost averaging?
Investing a fixed amount on a schedule.
What is dollar-cost averaging? →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.