Absolute rubbish metric, if anything it measures the absolute opposite of monetary velocity. The value is basically guaranteed to grow and grow even in the face of flat or declining economic activity<p>Monetary velocity is the sum of all transactions in a period divided by money supply Vt = nT / M<p>Imagine a model where the number of bitcoins is increased by one each period, and one random bitcoin is transfered to another party as economic activity<p><pre><code> day 1 day2 day 10
Total Money Supply: 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.0
Actual Transactions: 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Mean BTC days destroyed: 0.00 1.00 1.33 1.66 2.00 2.33 2.66 3.00 3.33 3.67
Monetary Velocity: 1.00 0.50 0.33 0.25 0.20 0.17 0.14 0.13 0.11 0.10
</code></pre>
As you can see monetary velocity goes in the exact opposite direction of bitcoin days destroyed and doesn't follow any similar curve.<p>Whats worse is it doesn't have a consistent relationship with any of the real measures as you change your assumptions. Imagine instead you model a situation where every coin turns over every period. In this case Total money supply, actual transactions and BTC days destroyed will all be the exact same thing, instead of the earlier wide divergence. Monetary velocity will be exactly 1 each time because total transactions will equal total money supply.<p>BTC days destroyed also has a hard upper limit at total days created which means it can't measure very quick activity accurately (all money turning over once a day will be identical to it turning over 10x a day) and will over weight economic growth after a period of low activity.