Definition ∞ Coin spending velocity measures the rate at which cryptocurrency units circulate within a given network over a specific timeframe. It calculates how frequently coins are transacted from one address to another. A higher velocity suggests increased transactional activity and utility for the digital asset. This metric offers insight into the active use and liquidity of a cryptocurrency.
Context ∞ In the realm of digital assets, coin spending velocity is a crucial indicator for assessing network activity and the economic utility of a cryptocurrency. An increasing velocity might signal growing adoption and utilization, potentially preceding price appreciation. Conversely, a declining velocity could indicate reduced transactional demand or a tendency for holders to retain assets. Analysts frequently examine this metric to gauge the vibrancy of a blockchain ecosystem.
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