Definition ∞ Value velocity measures the rate at which a unit of currency or digital asset changes hands within a given period. In the context of cryptocurrencies, it indicates how frequently tokens are transacted or circulated across the network. A higher value velocity suggests more active use of the asset for transactions rather than primarily for holding.
Context ∞ Value velocity is a metric often considered in economic analyses of digital assets, influencing discussions on their utility as mediums of exchange versus stores of value. Debates surround whether high velocity always indicates economic health or if it can also reflect speculative trading. Its interpretation varies based on the asset’s intended purpose.
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