Definition ∞ Market velocity, in the context of digital assets, measures the rate at which a cryptocurrency changes hands or circulates within the economy over a specific period. A higher velocity indicates that assets are being traded or spent more frequently, suggesting increased economic activity or speculative interest. Conversely, lower velocity implies assets are being held for longer durations. This metric helps assess an asset’s liquidity and utility.
Context ∞ News reports often reference market velocity when analyzing the fundamental health and adoption of a cryptocurrency. A rising velocity might be interpreted as a sign of growing utility or increased trading interest, while a declining velocity could suggest a shift towards holding or reduced usage. Understanding market velocity provides insights into an asset’s economic function and its role in various decentralized applications, impacting investment perspectives.
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