Cost Floor

Definition ∞ The cost floor represents the minimum price or cost at which an asset can be produced, maintained, or acquired without incurring a loss. In digital asset markets, this concept often relates to the average cost of mining a cryptocurrency or the aggregate acquisition cost for a significant holder. It acts as a theoretical support level below which sustained prices become economically unsustainable for producers or long-term holders. This level can influence supply and selling pressure.
Context ∞ Cost floor discussions frequently surface in crypto news during bear markets or periods of significant price corrections, particularly for proof-of-work cryptocurrencies like Bitcoin. Analysts refer to the cost floor to predict potential price bottoms or to explain the capitulation of less efficient miners. This concept helps assess the underlying economic viability and resilience of digital assets.