1. Why are people pessimistic at market bottoms and optimistic at market tops?
Meet fear and greed - these two emotions seem to drive much of our behavior in the cryptocurrency market.
When fear takes over, it's a doomsday scene. Twitter/social media is filled with revelations about further collapse and calls for tightening. "It's over, goodbye everyone, it's nice to meet you"
But when greed takes over, euphoria reigns. Suddenly everyone is an expert, confidently predicting that new all-time highs are just around the corner. "If this coin goes up another 10,000%, I can retire. Come on!"
So why does this happen?
Why are we so cautious at market bottoms and so reckless at market tops? A big part of it is loss aversion - we feel the pain of losses more strongly than the pleasure of gains.
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