The CEO of Binance anticipates ‘extremely high volatility‘ in cryptocurrency

<p>Here's how options traders would trade the "extreme volatility" predicted by Binance founder Changpeng Zhao for the cryptocurrency market over the next "few months."</p> <p>Volatility is a complicated statistical measure that traders and investors frequently employ. When the term is used, those unfamiliar with it will almost certainly attribute analysts with some sort of special standing. However, as demonstrated by a recent comment by Changpeng Zhao, founder of the Binance exchange, the majority of the time, people are unaware of what volatility means.</p> <p>This is not the first time CZ has erroneously assumed something about that subject. In May, CZ stated that volatility was "not unique to crypto," despite the fact that multiple sources, including Cointelegraph, indicated that no S&P 500 stock, with the exception of Tesla, had a yearly volatility of more than 70%.</p> <p>What is volatility, then?</p> <p>Volatility is a measure of how large daily price fluctuations are, and a higher level of volatility indicates that the price can change dramatically in either direction over time.</p> <p>While this indicator may seem counterintuitive, lower volatility periods indicate a greater likelihood of explosive moves. This is due in part to the fact that realised volatility is a backward-looking indicator. Traders often over-leverage during quieter periods, which results in larger liquidations during sharp price moves.</p> <p>Over the last two years, the data indicates an average 50-day volatility of 74%. Historically, the indicator has accelerated as it approaches 80 percent, but this is not a guarantee. The data from February and April 2017 provide a rebuttal to this thesis.</p> <p>Volatility is ineffective at distinguishing bull and bear markets because it measures only absolute daily oscillations. Additionally, a period of low volatility is not indicative of an impending dump.</p> <p>What if CZ is privy to information that we are not?</p> <p>Given how well-connected the founder of the world's largest cr