This Big Secret Will Help You Avoid Costly Crypto Mistakes
Watching the news today can be a hell of an ordeal these days. Every day, you can read about some new disaster, people having their lives ruined in some corner of the globe. And it sucks, but usually, you can forget about it and get on with your life. That’s because you don’t know those people.
But if it were your neighbor? Somebody you see every week at the grocery store? You’d care a lot more. Because it’s not just the abstract idea of human misfortune. It’s somebody that you know. That’s what we call “The Identifiable Victim Effect.”
When something goes wrong, it seems more real if you can identify one specific person that it happened to, and actually learn some details about what they went through because of it. If a recession causes a rise in unemployment, that sucks but if you and everybody you know were all lucky enough to keep their jobs, it’s a lot less likely to stick in your head.
It’s the kind of tragedy that bothers you for a minute. Maybe longer. But it’s relatively easier to put it in the back of your mind and go on with your life. But imagine that instead of hearing about the unemployment percentage going up, you hear about one person who lost their job, and then got kicked out of their house, and wasn’t sure if they were going to be able to feed their kids.
That would stick with you longer because the problem now has a human face. Humans are wired to care about human problems. They feel more strongly about them. And a problem doesn’t really feel human until you can identify some specific person that it’s happening to.
That instinct can be misleading since the rising unemployment number actually represents a lot more real human suffering than one person’s story.
The same illusion can steer you very wrong in the world of crypto if you’re not careful…
Identifiable Winners and Crowd Losers
It can drive FOMO, for example. Let’s look at one guy named Glauber Contessoto, who made a million dollars on Dogecoin last year. Just like you can have an Identifiable Victim Effect, you can also have an “Identifiable Winner Effect.”
This guy, sorry, there’s no way around it, is an idiot for putting so much money on a joke crypto whose price is driven mostly by the whims of pop culture and the memeosphere, two things with are completely impossible to predict in any meaningful way.
And what do you know, the vast majority of his unrealized gains would be wiped out within a few months by another turn in the market.
The world of crypto is full of these lone success stories. Somebody who happened to get lucky. Who timed the market exactly right, made a killing, and will never have to work another day in their life. And you get to know their name, maybe see a picture of their face in some article online. And that makes what happened to them seem real.
More real than all of the legions of people who bought high and got washed.
Don’t fall for it. You’re a lot more likely to get washed yourself than have an article written about how rich you are when it comes to meme coin frenzy or any other wave of hype. Because that one big winner you hear about? You can hear about them because they’re basically the only big winner. One of a few at best.
The losers, though, there are too many of them to be worth mentioning. So, don’t forget that we’re playing the long game. Don’t forget about the big picture. Follow the fundamental factors, and you have the best chance of a win. You won’t need to hope for a headline-making miracle.