How Psychology Sets the Crypto Market
Every bit and piece taking place in the crypto industry is a direct derivative from human behaviourism. Sounds pretentious, doesn’t it? It would, actually, should it was not true.
In fact, the crypto market is a great case in point of how people’s behaviour has such a tremendous impact on global processes. The industry of digital assets is a product of cognitive features, both on social and individual scales, since its take-off in 2008. It would be sound to mention that the invention of Bitcoin is a reaction to the lack of trust in traditional forms of money. Remarkable, is how the tendency to correspond with the socium’s behaviour has found its prolonged representation in the cryptocurrencies, and by saying “behaviour”, I also mean psychological tendencies which emerge individually and consequently form the social attitude.
In this article, I would highlight the two cornerstones of my claim, which brightly establish the crypto’s dependence on human behaviourism: airdrops, and pumps and dumps.
Airdrops and Retrodrops
Airdrops are vital both in today’s crypto promotion and in the economical development and prominence of the industry. Not only do they popularise certain crypto projects and form a solid community, but also contribute to the proper elaboration of them. But what does it have to do with social behaviour? Spoiler: everything.
Apparently, the concept of airdrops stands on two pillars: the individuals’ vacillation towards picking up the simplest vector of actions, and the essential desire to be an integral element and a contributor. The first point is not surprising: accordingly, a vast majority of people interested in crypto seek the fast, secure and, foremostly, cost-competitive path in entering the industry.
That is where airdrops enter the stage. The method to receive certain tokens or coins for free does not require further expenses and, hence, will definitely not result in user’s losses — and sometimes, it will even bring profits. Indeed an engaging and safe method of scaling the crypto industry.
The second point can be simply put as
a desire to be part of something.
Undoubtedly, the role of personality, its attitude to living, is mainly defined by the individual motto and values that people esteem. Specifically, the powerminds throughout global history have categorised and entitled the typology of human conscience — hedonism, rationalism, nihilism, and other methods of the worldview. However, this typology covers the individual and social-groups scales. The social dimension is immutably characterised by the mutual contribution, desire to communicate, cooperate, and pertain to something bigger. Accordingly, the airdrop ensures the actual participation of users in project promotion, adding value to the assets, being part of a community, and overall enhancing the positions of initiative on the crypto market. Besides, as Web3 is setting out the rules in the global technology arena, the latest start-ups tend to be built upon cutting-edge facilities, which are promised to revolutionise the tech industry. Thus, while a crypto project with advanced functionality launches an airdrop, the average participant would also feel itself a contributor to the development of certain novelties, meant to enhance the sphere.
Let’s regard the point in the particular instance. Lately, the crypto community has been buzzing about WhiteBIT’s Retrodrop — a way of granting users for taking part in their Network’s Testnet. A list of requirements was announced — amid the community-building activities a user should create the WB Soul — an unalterable and non-transferrable embedment on the chain, a part of bigger technology, promised to turn the tides — the soulbound. Consequently, as a part of society and individual, the person would feel like an element of the community with access to exclusive technology and contributor to its elaboration. And all that is regardless of the beneficial rewards.
The example clearly illustrates how the airdrops are simultaneously impacting and reflecting social behaviour. However, there is still a phenomenon that mostly relies on the human attitude — the so-called “pumps and dumps”.
Pumps and Dumps
Just like airdrops, pumps and dumps of the crypto market are both an outcome and the reason for a distinct person’s behaviour. Although the reasons for them are countless, the human mindset remains the crucial driving factor for them.
For instance, certain pieces of news or insights (sometimes false) from the influencers tend to come out sideways. Not to mention the notorious Elon Musk’s pump and dump of Bitcoin, which consequently led to the skyrocketing growth of the asset and spurred the purchase interest towards the coin, but later resulted in its abrupt downfall. To be more specific, the $BTC became overwhelmingly popular when Tesla invested $1.5 billion in the cryptocurrency, yet later 75% of the assets were sold, and the Bitcoin price began to fall after users turned to dump their coins.
From what has been presented, it is concluded that people are too dependent on impulsive and sometimes irrational actions simply with the thoughts to gain profits. This tendency does not only indicate the mentioned before picking up the simplest option but also reflects the appealing to the authority as an illusion of considerate behaviour.
Still, there is a “kingmaker” which puts pumps and dumps and airdrops together.
Closing Remarks: The Initial Hallmark of Crypto Behaviourism
FOMO, or Fear Of Missing Out, is not such an obvious yet one of the core reasons for people’s participation in airdrops and impulsive financial operations. The term is used for mainly online behaviour which characterises participation in certain activities in momentum only because of fear of missing this activity. In fact, FOMO criteria mainly echo the mature crypto-enthusiasts within the context of our article. Namely, when a user finds out about the event, the fact of its existence pushes him or her to take part in it, while the other reasons fade into the background. Although the reasons for participating can differ, FOMO remains the foremost and most intriguing.
Ultimately, crypto psychology should become a separate vector in studying the phenomenon of behaviourism — it is too complex and versatile not to heed it and study it.
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