Herd Effect: Where Is the Majority Going?
The herd effect, or herd instinct, is a powerful psychological force that compels people to follow the actions of a large group. In the crypto space, this manifests as FOMO (Fear Of Missing Out) – the fear of missing out on a profit – when investors collectively buy a certain asset that is rising in price, often without conducting their own thorough analysis. On the other hand, during a market downturn, panic can ensue, leading to mass sell-offs of assets, regardless of their fundamental value.
This crowd behavior creates fertile ground for conspiracy theories. When the market demonstrates inexplicable fluctuations, people tend to seek simple explanations, often blaming a conspiracy of "whales," secret groups, or even governments.
Why Does Volatility Fuel Conspiracy Theories?
The high volatility of cryptocurrencies makes the market extremely unpredictable. Traditional financial models often cannot fully explain sharp price jumps, which creates a sense of chaos and uncontrollability. In such an uncertain situation, the human brain strives to find patterns.#Binance