The unpredictable world of cryptocurrency: The way commercial psychology has an impact on market behavior
The world of cryptocurrencies has evolved rapidly in the last decade, prices fluctuating wild in response to a complex interaction of psychological, economic and techniques. While the popularity of cryptocurrencies continues to increase, understanding the role played by commercial psychology in the market behavior becomes more and more important for investors and traders.
What is commercial psychology?
Commercial psychology refers to mental processes that influence a person’s decisions when it comes to buying or selling assets, including stocks, bonds, basic products and coins. These psychological factors can include emotions such as fear, greed, emotion and anxiety, as well as cognitive prejudices, such as confirmation, anchoring and aversion of loss.
The impact of commercial psychology on cryptocurrency market behavior
Cryptocurrencies are known for their high levels of volatility, which makes it an excellent example of how commercial psychology can have an impact on market behavior. Here are some key factors to consider:
- Fear and greed : In periods of economic uncertainty or market slowing, fear can encourage investors to sell their cryptocurrencies, which leads to an increased decrease in prices. Meanwhile, greed can cause investors to buy cryptocurrencies at swollen prices, aggravating the impulse.
- Loss aversion : The fear of losing more than gaining goods can cause certain traders to maintain cryptocurrencies too closely, even when overvalued or underestimated compared to other active ingredients.
- Anchoring effect : Investors can become too attached to a certain price level, even if there is no clear reason for their attachment. This can cause them to resist on sale at lower prices or buy at higher prices.
- Confirmation prejudice : Traders who selectively seek information that support their existing views can be misled by believing that they have a good idea of what will happen, rather than open to us. evidence.
- Emotional noise : Cryptocurrency markets are characterized by a high level of noise and uncertainty, which makes traders difficult to distinguish real trends and simple psychological fluctuations.
Real examples
- ** Crypto-Bubble of 2017: The cryptocurrency market has experienced a rapid extension in May 2017, largely motivated by the mass-thrown media and speculation, rather than by the fundamental analysis or by the economic foundations.
- Rally 2020 : During the Covvi-19 Pandemic, investors were increasingly attracted by cryptocurrencies as package agents. This rally was fed by inflation fears, market volatility and the potential of a global economic return.
How to avoid trading psychology
Although commercial psychology can be a natural element in the investment process, there are measures that traders can take to reduce its impact:
- Develop a commercial plan : Set clear goals, risk management strategies and output criteria to help you stay disciplined in your business decisions.
- Use technical analysis
: Use graphic and techniques to identify trends and models, rather than rely on emotional decisions.
- Remain discipline : Avoid making impulsive or emotional decisions based on short -term market movements, focusing on long -term goals.
- Education continuously
: Stay up to date with market developments and learn from your experiences to improve your commercial approach.
Conclusion
The world of cryptocurrencies is a complex and dynamic system, which is increasingly influenced by psychological factors. Understanding the role played by commercial psychology in market behavior, investors and traders can better browse these markets and make more informed decisions.