Does a Flash Crash or Sudden Price Spike Lead to Higher or Lower Impermanent Loss than a Gradual Change?

The magnitude of impermanent loss is determined only by the final price ratio divergence from the initial ratio, not the speed of the change. However, a sudden, rapid price change (flash crash or spike) often results in less trading volume and lower fee accumulation during the event.

A gradual change might allow more arbitrage and normal trading to occur, potentially generating more fees to offset the IL, making the net loss smaller.