This in a continuation from my previous article (you can check it here!)
Finally, we would like to talk about herd behavior.
Herd behavior is the tendency of people to follow a group, believing that the majority's opinion is the correct one. In general, when faced with complex problems or solutions, we choose to follow the crowd.
Speculative bubbles arise, in many cases, due to the intense purchase of a certain Crypto. When it starts to appreciate, it attracts the attention of other investors - even though it is not necessarily a good investment.
In this sense, the crypto price starts to rise, until some people realize that its value is far above the project's economic fundamentals.
Thus, an intense sales process begins, which leads to another herd effect. After all, a group of investors starts selling their coins, and everyone goes after them. The investor may end up abandoning the sense of analysis just for fear of losing the trip.
And why do we need to dwell on these concepts?
Knowing what influences human decisions - habits, culture, experiences, emotions - can reduce our mistakes and biases in times of turbulence. In addition, it can make us more independent and secure in our decision making, as well as improve our results in the future.
It's really important to know those 2 behaviors to shield your bias from the outside world! You can always try to gain some money in those trends movements, such as doge or BTC, but you must be aware if you are using some leverage to not bankrupt!
