Acceptance psychology in trading: When prices always seem 'too high' until they reach a new level

In the financial market, especially with highly volatile assets like Bitcoin (BTC), the psychology of price acceptance plays a significant role in the trading behavior of many investors. When BTC rises from $50,000 to $60,000, many investors tend to think that this price level has reached a 'peak' and predict that the price will adjust back to $50,000 - $55,000. However, when BTC continues to climb to $70,000, their perception changes, and they start to see $60,000 as 'reasonable,' along with the belief that the price will make a slight adjustment to $63,000 - $66,000.

This loop continues until BTC may reach $80,000, or even $90,000. The reason lies in the trend acceptance psychology: each time the price reaches a new peak, the crowd's price acceptance shifts accordingly, and what was previously considered too high becomes normal. This is how investors tend to adjust their expectations based on market conditions, rather than relying on actual data about value or long-term potential.

This mentality can create a psychological and financial spiral that is difficult to control. Instead of making decisions based on the initial investment plan and solid principles or relying entirely on fundamental and technical analysis, investors may get swept away by a false sense of security at the new price level, setting inappropriate adjustment expectations, leading to ineffective buy/sell decisions..

That does not mean we advise you to / not to buy more. Simply put: Trading psychology - the greatest enemy of every trader.