Do you really understand what anchoring effect is? The pit that 99% of traders have fallen into at a loss How do market makers harvest through anchoring effects? What anchoring effect? Originating from the field of finance is a cognitive bias. Simply put, we are easily influenced by first impressions when making decisions Using the first contact value as a benchmark, For example, investor A entered the market at 100000 yuan When BTC drops to 85000, he is likely to feel very cheap. And investor B entered at 65000 When it rises to 85000 points, he is likely to feel very expensive This is all because investors inevitably compare prices with the initial market exposure. When A fell to 85000, at first glance, it dropped by 15%. Isn't it cheap enough When B rose to 85000, at first glance, it increased by 30%. Isn't it too expensive In fact, whether 85000 is expensive or not has nothing to do with the price entering the market. Judging whether the market is expensive or cheap based on the entry point is a typical anchoring effect. The initial 100000 or 65000 points become an anchor And we form our viewpoint around this anchor This is a mistake that novice traders are prone to make. 02. How do market makers create an "anchoring effect" harvest In the investment market, anchoring effects often influence investors' decisions, leading to irrational operations and becoming a common means for market makers. For example, in a bull market, when the price of a certain altcoin is at $100, many investors are reluctant to sell their altcoins. This is because the price had previously reached $150, and they were unwilling to wait until the price rose again to $150 before making a move, but they could no longer wait for that price. When the subsequent price drops to $80, investors are anchored to the previous $100; Falling to $50 and anchored again at $80; In this way, altcoins continued to decline, and investors were anchored and trapped in an unwilling cycle. This also explains why investors often feel at a loss and lose their ability to operate when altcoins continue to plummet; And when the price began to rebound and reached the previously anchored position, investors woke up from a dream and chose to sell one after another. ​ Looking at another scenario, when the BTC price skyrocketed from $60000 to $800000, many investors were deterred, feeling that the price was too high and afraid to buy. But when BTC continued to skyrocket to $100000 and then fell back to $80000, many people rushed in to "take advantage". This phenomenon, which is influenced by recent price signals, is very common in BTC investment. Whether it is "bear market thinking" or "bull market thinking", as well as behaviors such as predicting BTC price points, chasing gains and selling losses, they are essentially influenced by mindset anchoring. And the banker also took advantage of everyone's anchoring heart to harvest in rotation. Looking back at their BTC investment journey, I believe many investors have fallen into this mindset trap! How to overcome the "anchoring effect"? It's actually quite simple, you just need a real anchor Life is slightly different. The cryptocurrency market is full of uncertainty, and future trends are difficult to predict. But the core principle is the same, which is to determine the "anchor" of one's own investment system! ​ Everyone has a unique way of thinking and investment philosophy, and once a fixed thinking paradigm is formed, it is difficult to accept other patterns, which leads to thinking being more or less "anchored". As Charlie Munger once said, "In the eyes of those who hold a hammer, every problem is like a nail Whether it is value investing based on fundamentals or speculative strategies that follow market trends, having a mature trading system as the "anchor" of investment is necessary to maintain independent judgment and not go with the flow in the noisy cryptocurrency market. What investors need to do is to calmly execute their investment strategy within the "anchoring" framework they have set, which is closely related to the ability boundary we often mention. ​ Taking the common fixed investment strategy as an example, if a value investment system is adopted, then in cryptocurrency investment, your "anchor" should be the intrinsic value of a cryptocurrency! At the same time, investors should avoid the following four commonly used subconscious "anchors": 1. Not using current prices as an anchor to measure intrinsic value 2. Not using historical prices as an anchor to measure current investment value 3. Not using the initial purchase price as an anchor to measure investment profit and loss 4. Not using price fluctuations as an anchor to measure changes in investment value So, how to determine the intrinsic value of cryptocurrency? In cryptocurrency investment, various analysis tools and indicators can be used for comprehensive valuation. For example, for mainstream public chain coins, indicators such as network throughput, number of ecological projects, and developer activity can be evaluated; For application-oriented tokens, the landing situation of their actual application scenarios, user growth data, market demand and other dimensions can be analyzed. Only through rigorous and systematic valuation analysis can we find the true "anchor" of value investors. Only with this' anchor 'can one remain calm, hold firmly, and even weather the cold winter of the cryptocurrency market amidst the intense fluctuations in the cryptocurrency market. ​ So to summarize The most important way to overcome the anchoring effect is to find the anchor yourself With a real anchor, one will naturally not be affected by fake anchors And the true anchor requires in-depth research Making decisions based on price often leads to the suspicion of being trapped in anchoring effects.