Definition ∞ Trading below Cost describes a market condition where a significant portion of an asset’s supply is trading at a price lower than its acquisition cost for the current holders. This indicates that many investors are holding unrealized losses. It often signals a period of market distress or capitulation, where selling pressure may eventually subside as unprofitable positions are liquidated. This state can precede a market rebound.
Context ∞ The state of Trading below Cost is a frequently analyzed on-chain metric, often indicating investor capitulation and potential market bottoms. A key discussion involves the duration and depth of this condition necessary to signal a true market reversal. Future developments will focus on integrating this metric with other behavioral indicators to provide a more comprehensive view of market psychology and potential recovery phases.
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