The story
Daniel bought a crypto token when it was trading at $20.
During the bull market, it soared to $100. He didn’t sell.
Then the market turned.
$80. $60. $40. $25.
Daniel wasn’t worried. He had a number in mind: $100.
Every time he considered selling, he remembered the all-time high. At $25, the token looked like a bargain. Surely, a coin that had once reached $100 could get there again.
He ignored declining trading volume, weakening fundamentals, and competitors gaining market share.
Eventually, the token fell to $5.
Daniel still refused to sell.
“It’s worth much more than this,” he told himself.
But where did that belief come from?
Not from the project’s current value. Not from its future prospects.
It came from a price the market had already left behind.
The visual metaphor
Imagine an investor standing beneath a giant golden price tag marked $100.
A tiny crypto token rests in his hand, now worth just $5. Yet an enormous chain connects the token to that price tag high above him.
He keeps pulling the token upward, convinced it belongs at the top.
Meanwhile, the world around him changes: the market evolves, competitors emerge, and the old price tag gathers dust.
He isn’t measuring the token’s value.
He’s measuring the distance between reality and his memory.
The psychology behind it
Anchoring bias occurs when we rely too heavily on an initial piece of information when making judgments.
In crypto, that anchor might be:
- A token’s all-time high.
- Your original purchase price.
- A price prediction from a famous analyst.
- A previous bull market valuation.
The problem is that historical prices don’t tell you what an asset should be worth today.
A token that has fallen 90% isn’t necessarily cheap. It might be undervalued—or its prospects might have deteriorated dramatically.
Likewise, a token that has already risen 500% isn’t necessarily expensive.
Value depends on current evidence and future prospects, not the distance from a memorable price.
The practical takeaway
Before buying or holding a token, ask yourself:
“If I had never seen its historical price chart, what would I consider this token worth today?”
Evaluate its fundamentals, tokenomics, adoption, competition, liquidity, and risks independently of its all-time high.
Your entry price can help you calculate your return. It cannot tell you what the market owes you.
The market remembers no promises. Don’t let a number from the past make your decisions today.
— The Behavioral Investor — Understand yourself.
