The herd effect: how does it repeatedly harvest retail investors in the crypto world?

Have you ever wondered why you always buy at highs and sell at lows? The reason behind this may not be your judgment error, but rather the psychological trap of the 'herd effect' at play.

When the market is caught up in enthusiasm, the overwhelming media FOMO (fear of missing out) news and the crazy stories of wealth in social circles act like a powerful magnetic field, driving you to thoughtlessly follow the crowd into the market. However, the market often peaks when everyone is overly optimistic and bottoms out in times of despair. The historical Bitcoin 'halving market' and the speculation cycles of various altcoins repeatedly follow this rule—where the herd rushes, it often leads to a cliff.

🧠 Why do you become part of the herd?

Information waterfall: In a complex and uncertain market, following the actions of the 'majority' and 'smart money' becomes the easiest shortcut for decision-making.

Social recognition: When people around you are discussing a certain coin and making money, not participating can bring immense social pressure and a sense of isolation.

Authority halo: Blindly following the calls of influencers and institutions, abandoning your independent judgment.

💡 How to break the effect and become part of the minority?

Avoiding being the 'sheep' that gets harvested hinges on establishing contrarian thinking and an independent system:

Contrarian indicators: When community sentiment is extremely greedy and everyone is discussing cryptocurrencies, stay alert; when fear prevails and no one is paying attention, start to focus.

Data-driven: Pay attention to on-chain data (such as exchange inflows/outflows, whale address activity) rather than community noise.

Set and adhere to discipline: Before investing, set your buying logic, position management, and exit strategy in writing to combat emotions with a plan.

Stay away from noise: When making key decisions, consciously reduce time spent scrolling through social media and market software.

In the crypto world, an extreme magnifier of human nature, conformity is instinctual, but independence is a skill. Breaking free from the herd effect means having the courage to stay calm when others cheer and to think when panic ensues.

If you want objective interpretations of on-chain data and market sentiment analysis, rather than following the crowd's hot topics, you need to build a rational decision-making framework. $BTC $ETH #ETH走势分析 #加密市场观察