Definition ∞ An on-chain floor refers to a theoretical minimum price level for a digital asset, often derived from analysis of on-chain data. This metric typically represents the average acquisition cost of long-term holders or the aggregate cost basis of all coins in circulation. When the market price approaches or falls below this floor, it suggests that a significant portion of holders are experiencing unrealized losses. It serves as a psychological and analytical support level for market participants.
Context ∞ The concept of an on-chain floor is frequently discussed in cryptocurrency market analysis and news as a potential indicator of strong support or undervaluation. The situation involves analysts using various on-chain metrics to calculate this theoretical price level. A key debate centers on the reliability of such a floor as a predictive tool in highly volatile markets. Future market commentary will likely continue to reference these on-chain metrics to identify potential accumulation zones.
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