A Black Swan refers to an unexpected event with severe consequences. In the context of cryptocurrency, these events can significantly impact market prices and investor behavior. For example, a sudden regulatory decision, like government crackdowns on crypto trading, can cause rapid price drops.

Similarly, major hacks of prominent exchanges or wallets can instill fear and trigger sell-offs, leading to a market crash. Black Swan events are challenging to predict, which makes them particularly dangerous for investors. Unlike typical market fluctuations, these events can occur without warning and defy historical patterns, complicating risk management strategies.

Investors in the cryptocurrency space must remain vigilant and flexible, as Black Swan events can alter market dynamics overnight. Recognizing the potential for such unforeseen occurrences is crucial in navigating this highly volatile environment.