Token Movement Velocity
A measure of the speed at which units circulate in a network: it is calculated by dividing the volume of transactions on the chain by the market capitalization.
This indicator is often used to analyze the activity of the Bitcoin network, with higher numbers indicating a higher rate of movement of the currency, or a rise in usage.
Historical data for the past ten years
In the past two bull markets in history, data has always fallen along with prices. But after the bull market of 2021, Velocity went up in the face of rising supply (miners digging), so why?
In a normal bear market, if the price continues to fall, Velocity will fall. However, even though it has taken a long time for the price to fall from its peak, Bitcoin trading has remained very active. Anyone who has been following the development of the cryptocurrency world should have noticed that recently there have been a number of large companies, organizations and even government agencies that have started to enter the market, so it is possible that the large investors are continuing to trade Bitcoin.
Recent phenomena
As mentioned above, the difference between the current Bitcoin network and the previous two cycles is that despite the increase in Bitcoin supply during the bearish period, the rate of increase rather than decrease indicates that Bitcoin demand or visibility is higher than ever before, which is unlikely to be a sign of Bearishness for cryptocurrency development or even the currency market in the long run.
However, as you can see from the chart above, Velocity began to decline in mid-July and has been moving sideways ever since. Based on the relationship between token velocity and transactions, this reflects the fact that there are fewer transactions on the Bitcoin chain now than in the early days.
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