Anchoring and Adjustment Bias Definition

Anchoring and adjustment describe the tendency to rely on an initial value when evaluating later information. In cryptocurrency markets, traders often fixate on an entry price, an all-time high, or a viral forecast and allow that figure to shape decisions even after conditions change.

Why the bias persists in crypto

Rapid price swings and nonstop commentary promote a search for reference points. Once a number lodges in memory, it becomes a mental shortcut that guides subsequent trades.

Examples in practice

• A trader bought Bitcoin at USD 60,000. After a fall to 40,000 and a rebound to 45,000, the position remains open because 60,000 still feels like fair value.
  
• A prediction places Ether at 10 000. Weeks later, portfolio choices still revolve around that target despite shifting macro data.

Consequences for decision-making

• Holding losing positions while waiting for a return to the anchor.
• Selling winners at a preset price instead of following fresh signals.
• Mapping support or resistance levels to anchored numbers rather than objective data.

Ways to limit the impact

• Review positions with current fundamentals and technical indicators.
• Use stop-loss and take-profit orders to enforce discipline.
• Treat public forecasts as opinions rather than definitive benchmarks.