Unrealized loss is a financial deficit that exists on paper when an asset’s current market value is lower than its original purchase price, but the asset has not yet been sold. This loss is not actualized until the asset is liquidated. It represents a potential reduction in capital that can fluctuate with market conditions. This is a provisional accounting deficit.
Context
In cryptocurrency markets, unrealized losses are common during periods of price volatility, affecting investors who hold digital assets that have depreciated in value. News reports often track aggregate unrealized losses to gauge overall market sentiment and investor conviction. This is particularly relevant during bear markets or significant price corrections.
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