Network Cost Basis

Definition ∞ Network cost basis represents the average price at which all units of a particular cryptocurrency currently in circulation were acquired by their respective holders. This on-chain metric aggregates the purchase prices of all coins on the network. It provides a macro-level perspective on the collective profitability or loss of the entire investor base. This value helps assess the overall market’s unrealized gains or losses.
Context ∞ Analyzing the network cost basis is a key component of on-chain analysis frequently featured in cryptocurrency news. When the current market price falls below the network cost basis, it indicates that the average investor is holding an unrealized loss, which can signal potential capitulation or a market bottom. Conversely, a price significantly above the network cost basis suggests widespread unrealized gains, potentially leading to profit-taking behavior.