I'm often torn between the chaos of natural systems and the volatility that comes with financial markets.
Maybe a good rule of thumb is that anything that's chaotic is volatile but not everything that's volatile is chaotic.
In most cases, there's a sense of structure with volatility, but this is hardly the case with chaos.
By definition, chaos is an absence of structure. It's a messy state of complexity combined with randomness.
In nature, a great example of chaos is natural disasters. For example, a tornado is chaotic with countless variables interacting in ways that make accurate long-term forecasting quite impossible.
To me, even its destructive path is carved through landscapes with complete unpredictability.
Part of me thinks the very forces that create it ensure its path remains unknowable. But meteorologists can spot conditions that might spawn one, although predicting its exact behavior is something totally different.
There's no underlying structure to grasp or model with precision, since it's more or less pure chaos in action, especially when you observe its aftermath.
Organized Chaos
Financial markets tell a different story.
With crypto tokens, looking at their price chart may look like chaos at first glance, wild swings that give investors a whiplash.
But zoom out, look at it differently and you realize that those 30% daily moves up or down often coincide with China announcing new regulations or Elon Musk tweeting.
The volatility can be extreme, yes, but it's not always random. There's a rhythm to it, a structure hidden in the madness.
In general, the price of crypto tokens are volatile but not chaotic. There's an underlying structure driven by human behavior, market mechanics, and technological factors. These serve as the framework that market dynamics operate within.
In this regard, what's particularly interesting is how these market patterns create their own reality.
When enough market participants believe in certain technical levels or market indicators, their collective actions turn these beliefs into self-fulfilling prophecies.
Sometimes, we witness a phenomenon of chaos organizing itself into volatile patterns, like order emerging from disorder.
Coordinated Volatility
Viral trends on social media. As an initial spark, a trend seem chaotic. Like why does one dance move catches fire while tens of thousands of others fade into obscurity?
Usually, there's no logical answer to pinpoint what makes a certain content resonate while similar attempts fall flat.
Those who've achieved it tend to say something along the lines that it's a mysterious alchemy of timing, cultural context, and countless unseen variables colliding at just the right moment.
But once a trend gains traction, its spread becomes volatile yet structured.
In that, it follows predictable pathways through networks effects like first catching fire among Gen Z users, then being adapted by millennials, and if has strong velocity finally reaching my grandma on Facebook with a completely different interpretation.
Through platform algorithms, there's a pathway to measure engagement metrics and create some form of gravitational pull around content that starts gaining momentum.
Here's a rather interesting way of looking at it from a broader level. Both chaos and volatility can keep us up at night. But at least with volatility, we have a chance of understanding the 'why' behind the movement.
There's a big difference between navigating rough seas with a compass versus being caught in an ocean where direction loses all meaning.
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