On-Chain Velocity

Definition ∞ On-chain velocity measures the rate at which cryptocurrency tokens change hands within a blockchain network. It represents how frequently tokens are transacted between different addresses over a specified period. High on-chain velocity suggests active network usage and transactional demand for the asset. This metric provides insight into the utility and liquidity of a token beyond simple price movements. It can indicate underlying economic activity.
Context ∞ The current discussion surrounding on-chain velocity often involves its correlation with network health and potential price movements, though interpretation requires careful consideration of other market factors. Debates frequently address the distinction between speculative trading activity and genuine utility-driven transactions influencing this metric. A key development to observe is the refinement of analytical tools to differentiate between various types of on-chain movements for more precise economic assessments.