Definition ∞ Realized losses represent the actual financial deficit incurred when an asset is sold for less than its purchase price. This signifies a definitive reduction in capital, as opposed to unrealized losses which exist only on paper. Tracking realized losses is essential for financial accounting and performance analysis.
Context ∞ The discussion of realized losses in cryptocurrency markets often relates to tax implications and investor sentiment following market downturns. Analysts scrutinize the volume of realized losses as an indicator of capitulation events or the extent of investor distress. Understanding the drivers behind these losses is crucial for assessing market bottoms and potential recovery trajectories.
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