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Token velocity measures how frequently tokens change hands, reflecting liquidity, speculation, and adoption. High velocity may indicate active trading, short-term speculation, or low holding incentives, while low velocity suggests long-term holding and ecosystem trust. Analysts track velocity alongside supply, staking, and market activity to assess demand-supply dynamics. Understanding velocity helps researchers anticipate price trends, potential sell-offs, and investor behavior. It also informs on the effectiveness of incentive programs or tokenomics design. For long-term analysis, combining velocity with adoption and network activity provides a comprehensive view of ecosystem health and sustainability.
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