The risk of following trends: the danger of the herd effect in the crypto market
In the crypto market, it is common to see investors entering an asset just because "everyone is buying". This behavior is known as the herd effect, and it can be dangerous. When a cryptocurrency skyrockets quickly, it is often the result of speculation and not solid fundamentals — which can lead to significant losses when the euphoria fades.
The problem is that, in these moments, the fear of "missing out" (FOMO) speaks louder than reason. Many buy at the peak, without understanding the project or the real proposal of the coin. When the price starts to correct, panic sets in — and the investor sells at a loss. This cycle repeats frequently and affects even those who are already experienced.
The best way to protect yourself from the herd effect is to have a well-defined strategy. Study the assets, understand the market, and know why you are investing. Those who follow their own criteria and not the movement of the majority have a better chance of staying strong during tough times — and reaping rewards when the market stabilizes.
