Average cost basis represents the average price at which an investor acquired a specific cryptocurrency, accounting for multiple purchases at different prices. This metric is crucial for determining an investor’s profit or loss on their holdings. It helps in calculating capital gains for tax purposes and evaluating investment performance over time.
Context
News often references average cost basis when discussing investor sentiment, potential selling pressure, or market psychology. A collective average cost basis below current market prices suggests many investors are in profit, potentially leading to increased selling activity. Understanding this concept aids in assessing the financial positions of market participants and their likely reactions to price fluctuations.
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