Asset Depreciation

Definition ∞ Asset depreciation represents the decrease in an asset’s value over time. This reduction can result from wear and tear, obsolescence, or market factors. In traditional accounting, it systematically allocates an asset’s cost over its useful life. For digital assets, this concept primarily pertains to market value fluctuations rather than physical decay.
Context ∞ In digital asset markets, asset depreciation often relates to significant price declines due to market volatility, regulatory changes, or project failures. News reports frequently cover substantial drops in cryptocurrency values, impacting investor portfolios and market sentiment. Understanding this phenomenon is vital for assessing the financial health and long-term viability of digital asset holdings. Market participants monitor these value shifts to adjust their investment postures.