The Beta Coefficient measures the volatility of an asset compared to a benchmark, often the market as a whole. In the context of cryptocurrencies, it indicates how much a specific coin’s price tends to move in relation to a larger market index, like Bitcoin or Ethereum. A Beta greater than 1 suggests that the asset is more volatile than the benchmark.

For example, if a coin has a Beta of 1.5, it typically moves 50% more than the benchmark. Conversely, a Beta of less than 1 indicates less volatility. Traders and investors use the Beta Coefficient to assess risk and make informed decisions. A high Beta might attract those seeking higher returns, while a low Beta might appeal to those looking for stability.

Understanding Beta can help investors strategize their portfolio, balancing higher-risk assets with more stable ones. Ultimately, the Beta Coefficient serves as a tool for assessing how cryptocurrencies might behave in changing market conditions.