Definition ∞ Capital Rotation Speed measures how quickly funds move between different assets or sectors within the cryptocurrency market. This metric indicates the pace at which investors reallocate their capital in response to market conditions or perceived opportunities. It serves as an indicator of market dynamism and the willingness of participants to shift positions. A higher speed suggests more active trading and market fluidity.
Context ∞ Observing capital rotation speed helps identify shifts in market sentiment and emerging trends. During periods of high rotation, capital might flow from larger, established assets into smaller, more speculative ones, or vice-versa. This movement can precede significant market shifts or signal a change in investment strategies among participants. Understanding this speed offers insights into market cycle phases and speculative activity.
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