What is "Velocity"?

Velocity is a measure of how quickly coins are circulating in the network, and is calculated by dividing the on-chain transaction volume (in USD) by the market cap (i.e., the inverse of the NVT Ratio). If transactions are absent, then the token lacks liquidity and its velocity equals zero.

Why is "Velocity" important?

Token velocity is important because it shows investors how volatile their money is in their choice cryptocurrency. If the tokens increase at a rapid rate, investors will likely sell their tokens for cash. This causes the token’s value in the market to drop.

What is the formula for "Velocity"?

Velocity = 1 / NVT = Transaction volume in USD / Market capitalization in USD