Is there a recommended approach to estimating the annual volatility of different cryptocurrencies?

3 answers

• RIZWAN KHAN PATHANSep 21, 2025 · 2 months ago
  Estimating the annual volatility of cryptocurrencies can be challenging due to their inherent volatility and lack of historical data. However, one commonly used approach is to calculate the standard deviation of the daily price returns over a specific period, such as one year. This provides a measure of the average deviation from the mean price and can give an indication of the cryptocurrency's volatility. Other approaches include using historical volatility models, such as the GARCH model, which takes into account the time-varying nature of volatility. Additionally, some analysts use implied volatility derived from options pricing models to estimate future volatility.
  677

  339
• Deepak Singh MaharaMay 14, 2021 · 4 years ago
  When it comes to estimating the annual volatility of cryptocurrencies, there is no one-size-fits-all approach. Different cryptocurrencies may exhibit different levels of volatility, and their price movements can be influenced by various factors. Some traders and investors rely on technical analysis indicators, such as Bollinger Bands or Average True Range, to estimate volatility. Others may use fundamental analysis to assess the underlying factors that could impact a cryptocurrency's volatility, such as market demand, regulatory developments, or technological advancements. It's important to consider multiple approaches and conduct thorough research before making any estimations.
  687

  229
• Harsh GuptaDec 17, 2023 · 2 years ago
  BYDFi, a leading digital asset exchange, recommends using a combination of historical data analysis and market sentiment analysis to estimate the annual volatility of different cryptocurrencies. By analyzing past price movements and considering factors such as trading volume, market liquidity, and news sentiment, traders can gain insights into the potential volatility of a cryptocurrency. Additionally, BYDFi provides advanced trading tools and indicators that can assist traders in estimating and managing volatility risk. It's important to note that estimating volatility is not an exact science and should be used as a guide rather than a definitive prediction.
  667

  167