Having been hugely influenced by our anchoring to the first figures we saw, and then been influenced by being motivated to see the price go higher, we’ll then likely settle on an approximate number where Bitcoin might peak this time. This is where confirmation bias can step in.
Confirmation bias is where we, consciously or not, seek out information that agrees with us and disregard anything that doesn’t. We see it a lot in politics where people see all the good their favourite party does and disregards the mistakes, whereas another person will see the exact opposite because they prefer the other side.
So if you’re anchored to $20,000 from the previous all-time high, then attenuate it up because you want it to be higher (motivated perception), then you’ll be guessing around $35,000, maybe. That leaked Citibank report at $300,000? Miles away. It gets disregarded. Any articles or tweets you see that support your ideas of what might happen, you allow to reinforce your idea and become more sure of it.
Even if you’re knowledgeable on Cryptocurrency, this still applies. In fact, it may apply more, as you’ll likely be reading more about it from more sources. More things to disregard, and more things to support you. There is someone out there just as knowledgeable as you who’s reached a very different conclusion.
But again, Bitcoin doesn’t care what number you’ve settled on. It doesn’t care that you want it to go up. It doesn’t care what articles you read, what articles you disregard, and what figures you consider ridiculously high or low. That figure seems so realistic in your head because all the biases led you to it and then confirmed it. Someone else will be just as as sure, and maybe just as valid, because we’re all guessing.
If you want a guess at where Bitcoin is going to peak, you’ve come to the wrong place. I’d just be guessing too. Plus, I’ve got mostly Ethereum anyway, so the Bitcoin figures don’t affect me so much. All the same rules have been at play on my brain in regard to Ethereum.
Humans aren’t logical creatures. Don’t be fooled into thinking we are. The very reason we have logic rules is to keep our brains in check. If you’ve got a lot of money in Bitcoin, you may wish to brush up on your logic now.
The trick is to act logically and make a decision early. If the price starts to rocket into uncharted territory, you’ll likely let emotion interfere too, and emotions get in the way of our logical decisions. If it suddenly plummets, the same will apply.
So all we can do is understand the following:
- The number in our head about where Bitcoin is going is influenced heavily by the early numbers we saw.
- That number will be likely influenced by motivated perception – or wishful thinking.
- Just because we think our numbers check out doesn’t mean they do.
Really, we’re just guessing. We have two options. The sensible one is to look at what we’ve paid, what we’d like to realistically and safely cash out at, and stick to it, and make the logical decision before emotion gets involved too much. We can use facts such as the amount we’ll get at the sell, and what we can do with that money.
The next option is to understand it’s a gamble, hope to go big, but expect a likely loss. Wing it and enjoy the ride. Either way, have an exit strategy, early.
Just don’t kid yourself you know too much about it. We’re all guessing.