Market Health Indicators

Definition ∞ Market health indicators are specific metrics used to assess the overall condition and stability of digital asset markets. These indicators include factors such as trading volume, liquidity, volatility, market capitalization, and on-chain activity. By analyzing these data points, participants can gain insight into prevailing trends, potential risks, and the underlying strength of various cryptocurrencies. They serve as essential tools for informed decision-making and risk management.
Context ∞ News reports frequently cite market health indicators to explain price movements or broader trends in the cryptocurrency space. Discussions often involve interpreting divergences between price action and fundamental metrics, such as network usage or developer activity. The ongoing challenge is to develop more sophisticated indicators that accurately capture the complex and rapidly evolving nature of digital asset markets.