Risk perception plays a huge role in trading decisions. Here are six key factors that influence how we perceive and assess risk in the crypto market:
Voluntariness – Risks we choose (like leverage trading) feel less dangerous than those imposed on us (like exchange hacks).
Control – We perceive risks as lower when we feel in control (manual trading versus relying on trading bots).
Singularity – A single major event (for example LUNA or FTX collapses) feels more severe than a gradual market decline.
Reversibility – Irreversible losses (rug pulls) seem worse than temporary drawdowns.
Time Delay – Immediate risks (market volatility) feel more urgent than long-term ones (regulation, inflation).
Perception – Risks we can’t see often feel more threatening than visible ones (price drops).
Being aware of these biases can help us make more rational decisions and manage risk effectively.
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