BTC Cost Basis

Definition ∞ BTC cost basis refers to the average price at which Bitcoin holders acquired their coins. This figure is a fundamental metric for assessing the profitability and potential selling behavior of different investor cohorts. It represents the aggregate capital invested in Bitcoin by a specific group or the market as a whole. Understanding the cost basis helps determine where significant support or resistance levels might exist.
Context ∞ The BTC cost basis is a vital analytical tool frequently cited in cryptocurrency news to understand market structure. When the current Bitcoin price approaches or falls below the average cost basis of a large group of holders, it often signals a period of financial stress for those investors. This can lead to increased selling activity or, conversely, a strong demand zone if new buyers step in, providing critical context for market reports.