Price anchoring prevents many people from getting into Bitcoin. Sad, but true.
Discussion
Huh 🧐
"Price anchoring, also known as anchoring bias, is a psychological trick that can influence how people perceive the value of something, including Bitcoin. Here's how it works with Bitcoin:
* **Initial Information as an Anchor:** Imagine someone encountering Bitcoin early on, when its price was much lower than today. That initial price becomes an "anchor" in their mind, a reference point for future valuation.
* **Impact on Decisions:** Even if the price of Bitcoin fluctuates significantly, they might hold onto the initial price as a benchmark. This can lead to:
* **Buying When Price Seems Low:** If the price dips below the remembered anchor (e.g., someone who bought at $10,000 might see $8,000 as a bargain).
* **Hesitation to Buy When Above Anchor:** Conversely, if the price shoots way up, they might hesitate to buy because it seems expensive compared to the anchor price.
**Bitcoin's Volatile Nature and Anchoring:**
Bitcoin's price swings can be dramatic. Anchoring bias can be particularly strong in such a volatile market because:
* **Rapid Changes Create Anchors:** Frequent price movements can create multiple "anchors" for investors, depending on when they entered the market.
* **External Influences:** Media reports or social media discussions about past highs (or lows) can reinforce the anchoring effect.
**Remember:**
* Price anchoring is a mental shortcut, not a reflection of true value.
* Bitcoin's price is influenced by various factors, not just past performance.
By understanding anchoring bias, you can be a more informed Bitcoin investor, making decisions based on current market conditions and not solely on past price points."
Clean breakouts of prior range tend to shift this, but agree that unit bias is sometimes the blockage for new retail level buyers. They often don’t even realize you can convert smaller amounts of fiat
Not sure I fully understand. Are people to waiting for it to go lower? It may, but they may miss the current price in fiat terms.
He means folks dont realize they can buy fractions of a BTC. It doesnt help that they can no longer afford 1 whole BTC. Seems obv we need to change the units to sats per dollar. 1475 sat/$ fairly easy to deal with. And call it sats per dollar, not this confusing "Moscow Time" I keep seeing
Agreed. At some point btc really should be priced in different terms. 100,000 satoshi increments just may get the folks jumping. Im teaching a homeschool crypto class to a bunch of 12-15 y.o. right now and the initial response is, "yeah but I dont have thousands of dollars". Thus begins the 100M sat breakdown. 😁