What are the key factors that contribute to the volatility skew in the world of digital currencies?

1 answers

• Dec 28, 2021 · 3 years ago
  The volatility skew in the world of digital currencies is influenced by various factors. One of the main factors is market demand and supply. When there is a high demand for a particular cryptocurrency, its price tends to increase, leading to a positive skew. On the other hand, when there is a low demand or an oversupply of a cryptocurrency, its price may decrease, resulting in a negative skew. Another factor is market sentiment. Positive news and developments in the cryptocurrency industry can create a positive sentiment among traders and investors, leading to an increase in demand and a positive skew. Conversely, negative news or regulatory changes can create a negative sentiment, resulting in a decrease in demand and a negative skew. Additionally, external factors such as regulatory changes, technological advancements, and market manipulation can also contribute to the volatility skew. By understanding these factors, traders can better analyze the market dynamics and make informed trading decisions.
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