Price below Cost Basis

Definition ∞ Price below cost basis signifies a situation where the current market price of a digital asset is lower than the average acquisition price of its holders. This condition implies that a significant portion of investors are experiencing unrealized losses on their positions. It often occurs during bear markets or severe price corrections, indicating widespread financial stress among market participants.
Context ∞ When cryptocurrency news reports on an asset’s price falling below its cost basis, it provides critical context for understanding market pain and potential capitulation. This scenario can lead to increased selling pressure as investors try to limit further losses, or it may signal a potential buying opportunity for those with a long-term outlook. Monitoring this metric helps analysts gauge the severity of market downturns and anticipate potential recovery phases.