Psychological factors that determine the manipulation of the cryptocurrency market
In the manipulation of the cryptocurrency market, the world has become more and more complex and complex, causing many factors to contribute to its emergence. Although some may judge the markets of cryptocurrencies as a distinguished sphere of human psychology, reality is that psychological bias and influence play an important role in the formation of the behavior of individuals in these markets.
1. Fear and greed
Fear and greed are two main psychological engines which often contribute to market manipulation. Fear can encourage individuals to sell their cryptocurrencies at increased prices, hoping to record profits when they become cheaper. This fear is still improved by the series of news, which often focuses on a high market disaster or other negative events. On the other hand, greed can encourage investors to buy a cryptocurrency without appropriate research or decent inspection, increase demand and increase prices.
2. Emotions and Mood
Emotions and mood play an important role in the development of investment and market behavior solutions. The fear of jumping (Phomo), anxiety and excessive self -confidence are all the usual emotions that can affect the purchase and sale of solutions. In the cryptocurrency space, these emotions often manifest themselves as a desire to buy or sell quickly, entirely risks and basic foundations.
3. Group thought and social proof
Group thinking and social evidence can also contribute to market manipulation. Investors tend to follow the crowd and join the trends according to the views of others. This phenomenon is known as social evidence when investors believe that others have carried out profitable transactions or take strong positions for their collective mood.
4. Confirmation bias
Another psychological factor that can affect market behavior. Individuals are more likely to search for information that supports their existing bias and ignore contradictory evidence. In the cryptocurrency markets, this can lead to a biased image of the main economy and technology and promote price changes in a certain direction.
5. Lack of transparency and information
The lack of transparency and information on the cryptocurrency markets can also contribute to manipulation. Market players often rely on secondary sources of new and data that can be unreliable or outdated. Without the right information, investors can make uninformed decisions based on incomplete knowledge.
6. Mood of the market and emotional work
Market moods and emotional work play an important role in training market players. Investors often engage in emotional work that involves the use of psychological methods to influence their emotions and their biases. This can lead to a self-purchase cycle and sales solutions determined by emotions, not to an objective market analysis.
7. Limited risk tolerance
The cryptocurrency market is characterized by high levels of volatility and uncertainty. Investors may not hesitate to buy or sell cryptocurrencies for losses that can make emotional decisions due to fear or greed, rather than deeply assessing the basic risk.
8. Information asymmetry
Information asymmetry means a phenomenon where certain investors have access to more information than others. This can create unequal conditions where investors with more knowledge or resources can make reasonable decisions that are disproportionate with them.
9. Network effects and social influence
The effects of the network indicate a phenomenon where the value of cryptocurrency increases when more people invest in it. Social influence is also an important factor in the impact of the network where individual actions can have a major influence on the behavior of others by the social group.