Coin Velocity

Definition ∞ Coin Velocity measures the rate at which a unit of a particular cryptocurrency changes hands within a given period. It is calculated by dividing the total transaction volume by the average network supply. This metric quantifies how frequently digital assets are being transacted or circulated throughout the ecosystem. High velocity suggests active use of the coin for payments or trading.
Context ∞ Coin Velocity is frequently cited in economic analyses of digital assets to assess their utility and market health. A rising velocity might indicate increased economic activity or heightened speculative trading, while a declining velocity could suggest asset hoarding or reduced transactional use. News reports often correlate changes in velocity with shifts in market sentiment or adoption rates.