Definition ∞ Cost Basis Defense describes a market scenario where the price of a digital asset approaches its average acquisition cost for a significant group of holders, who then collectively resist further price depreciation by buying more or refusing to sell. This behavior aims to protect their initial investment levels, preventing the asset from trading below their aggregate purchase price. It functions as a psychological and economic support level, often observed during market corrections. This collective action can establish a temporary price floor.
Context ∞ Crypto news frequently reports on instances of Cost Basis Defense as a key indicator of market resilience during downturns. The current discourse often focuses on identifying specific price levels where large groups of investors have a similar cost basis, as these areas frequently show increased buying activity. Understanding these defense zones helps assess the strength of market support against downward price pressure.
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