Key Cost Basis Break

Definition ∞ Key Cost Basis Break occurs when the market price of an asset falls significantly below the average purchase price of a substantial group of investors. This event suggests that a large portion of holders are now experiencing unrealized losses. It can trigger further selling as investors seek to limit their downside, potentially accelerating price depreciation. Such a break often acts as a psychological barrier for market participants.
Context ∞ Identifying a key cost basis break is a significant analytical tool for assessing potential market capitulation or strong selling pressure in digital asset markets. Discussions frequently involve on-chain data analysis to determine the aggregate cost basis of various investor cohorts. Observing this metric helps predict periods of increased market volatility or sustained downward price action.