Beta measures how much an asset tends to move relative to the broader market. The market itself has a beta of 1; an asset with a beta of 1.5 has historically swung about 1.5 times as much as the market, while a beta of 0.5 suggests roughly half the movement.
It is a gauge of one kind of risk — sensitivity to overall market moves — not a measure of quality or direction. A high-beta stock amplifies both gains and losses, which can feel great in a rising market and brutal in a falling one.
Beta is backward-looking and can shift over time, so it describes how an asset has behaved, not how it must behave next. It is most useful as one lens on how a holding might affect a portfolio's overall volatility.
Worked example
A stock with a beta of 1.5 has tended to rise or fall about 1.5% for every 1% move in the market.
This definition is general education, not investment advice. Markets — especially crypto — are volatile and you can lose money. Please read our disclaimer and see our methodology.