Hi everyone!
Today I want to talk about anchoring bias. This bias occurs when we base our decisions on a cryptocurrency's price. We usually use the all-time high (ATH) as a reference point.
Let's look at an example with Bitcoin.
We might think that if Bitcoin once reached $126,000 it will reach that price again. The problem is that we assume the market has emotional memory and that if it's already been at that value it will be again. Therefore, we think it's okay to buy at a lower price and hold onto the loss thinking it will return to that value.
As a consequence of this bias, we can hold onto losses for a long time or avoid taking profits thinking it might reach that ATH again.
It's important to define clear rules. Set a stop-loss and a take-profit level.
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