Today, I will like to discuss the cognitive biases I ought to avoid in regards to crypto. As much as possible, I will draw links between these cognitive biases and Publish0x since we all spend most of our waking hours here and can do with a greater awareness of our mental state of mind.
1) Confirmation Bias My first foray into crypto was with Hodlnaut, a Singapore start-up which is also a crypto-lending platform. It seems that Hodlnaut has gained a lot of traction recently, with many Publish0x users posting reviews of their user experiences recently. Now since I am a firm supporter of Hodlnaut, I could consciously seek out those reviews that sing the praises of Hodlnaut and ignore the others that expound on Hodlnaut's limitations and flaws. Hence, I need to not disregard these reviews that do not paint the most rosy picture so that I can maintain an objective view of Hodlnaut.
2) Availability Heuristic Also known as the recency bias, this bias refers to how we place a disproportionately amount of significance on the most recent pieces of news we have heard. In recent weeks, many Publish0x authors have posted glowing articles about Harvest Finance or the upcoming Cardano global summit or how Solana is gaining prominence as the Ethereum killer. I'm not suggesting that my fellow authors are making assertions that have no basis. Far from it! Nonetheless, I think I have the tendency to be swayed by trending crypto news and fall into a pit of FOMO. What I strive to remember is that what works awesomely for other investors may not be the optimal strategy for me at this current point in time (due to my limited finances. LOL). Hence, I should stick to my plan I have already formulated before incorporating new ideas.
3) Sunk Costs Fallacy The things that I'm gonna express here may somewhat contradict my reflection in the second paragraph, but I guess this goes to show how complicated we homo sapiens are. Anyway, the sunk costs fallacy refers to how many investors grow overly attached to their investments and still insist on holding on to them even when results have shown that such investments are dead weight. This fallacy will particularly come in handy when I instinctively reject new ideas and blindly stick to my plan without critically examining if this plan still works for me or not. With this in mind, I think one way to prevent myself from succumbing to the sunk costs fallacy is to make a deliberate attempt to diversify my crypto portfolio rather than stick to the twin pillars of Bitcoin and Ethereum. Definitely not suggesting that Bitcoin and Ethereum are dead weight, but I want to detach myself slightly emotionally rather than pile all my hopes on them. Don't put all my eggs in one basket, so to speak.
Does any of these 3 cognitive biases apply to you? How do you keep your emotions in check?
