Definition ∞ On-chain momentum refers to the directional force and speed of activity occurring directly on a blockchain network, often assessed by metrics such as transaction volume, active addresses, and total value settled. It provides insight into the fundamental usage and growth of a digital asset or protocol. Strong on-chain momentum indicates increasing network utility and user adoption, which can precede or confirm price movements. It reflects genuine network health.
Context ∞ Tracking on-chain momentum is a key analytical approach for investors seeking to understand the underlying health and potential future price action of digital assets. A consistent upward trend in these metrics can signal sustained demand and organic growth, providing a more fundamental basis for price appreciation than speculative trading alone. Conversely, declining on-chain activity may indicate decreasing interest or network stagnation.
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