Chasing the rise of altcoins is the result of human weaknesses conspiring with market mechanisms. 1. The fantasy of getting rich leads to the illusion of accompanying rate, 2. The illusion of amount creates a false sense of security, 3. FOMO sentiment triggers mass contagion, 4. The law of capital rotation drives Bitcoin market share to flow to altcoins, 5. The wealth-making effect attracts new funds to enter the market, 6. The low circulation and high valuation structure are easily controlled, 7. The deviation of survivors distorts risk perception, 8. The time discount effect is ignored Depending on long-term risks, 9. The anchoring effect hinders stop loss. The rational strategy is: 1. Judging the cycle stage based on Bitcoin market share, 2. Single coin position ≤5%, meme coin ≤2%, total copycat exposure ≤20%, 3. Veto projects without application, low circulation and high valuation, pure price investment, and finally, by acknowledging human weaknesses, using rotation laws, and avoiding manipulation traps, participating in the bubble while retaining a retreat, realizing profit capture under controllable risks.

Knowing that altcoins will inevitably pull back after a surge, investors are still chasing highs one after another. Behind this phenomenon is the deep binding between human weaknesses and market mechanisms . From the psychological fantasy of getting rich to the cyclical rotation of capital manipulation, the essence of chasing the rise is the conspiracy result of risk cognitive bias and group game . This article will reveal its underlying logic and analyze the way to break through rational participation in the market.

1. Psychological drive: the fatal temptation of fantasy of getting rich and cognitive bias

1. The hallucination of getting rich overwhelms the risk rationality : retail investors naturally pursue short-term high returns, and the daily increase of altcoins can reach 20%-200%, while Bitcoin’s daily increase of 3% is already strong. This difference in returns has led to the psychological expectation that "it takes a year to double your Bitcoin and buy altcoins, and buy altcoins may double tomorrow." Even though I know that it may return to zero, the illusion of "returning the market by 10 times if you lose 8 times and win 10 times" continues to drive speculation.

2. The false sense of security created by the illusion of amount : Bitcoin’s unit price exceeds $100,000 is daunting, while altcoins with a unit price of $0.001 give people the illusion of “cheap”. In fact, investing $100 to buy 100,000 low-priced coins is the same as holding a trace bitcoin, but the illusion of quantity makes people mistakenly think that holding more chips is more controllable.

3. FOMO Emotion and Social Contagion : Social media and KOL hype form information cocoons. When the community is filled with "XXX coins soaring" and "the next hundred times coins", the fear of missing out (FOMO) will suppress rational judgment. Data shows that the market value of the meme coin sector can soar from 5.5 billion to 8.5 billion US dollars in a single month, driven entirely by emotional liquidity .

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2. Market mechanism: Precision design of capital rotation and narrative traps

1. The inevitability of capital rotation : There is a clear path to the bull market: Bitcoin → mainstream coins such as Ethereum → top 50 altcoins → small-cap coins are in full swing. When Bitcoin’s market share drops from 65.9% to 61%, funds will inevitably flow to altcoins for excess returns. The recent increase in XRP, SOL, etc. has exceeded 20%-40%, which is a reflection of the rotational law .

2. The market necessity of the "rich-making effect" : new funds enter the market and need to stimulate wealth stories. The rise in Bitcoin led by institutional funds is difficult to attract retail investors, and cases of altcoins getting rich (such as an investor turning 1.8 million into 68 million) have become the best advertising. This is the core reason why the copycat season will inevitably appear in the later stage of the bull market .

3. Manipulation trap of low circulation and high valuation : Most altcoins belong to the "low circulation and high complete dilution valuation" type. The project party only released a small number of tokens, but claimed a valuation of tens of billions. This structure makes the price very easy to be controlled , attracting retail investors to unlock the selling after taking over.

3. Risk cognitive distortion: probability illusion and self-deception

1. Successful cases of survivor bias amplification : The media reported successful cases (such as SPX6900 rose by 10,500%), but 99.9% of them were hidden and returned to zero. Investors mistakenly regard low-probability events as the norm and ignore only 10-15 realities with real value in the 25,000 cryptocurrencies.

2. Time discount effect : The human brain naturally overestimates instant returns and underestimates long-term risks. The dopamine stimulus brought by the rapid rise of altcoins makes people selectively forget the historical law of "more rises, more falls." Typical examples are Ozzy Osbourne commemorative coins hyped after the death of a celebrity and eventually the price is zero .

3. Anchor effect and stop loss barriers : Investors often set peak prices as psychological anchors. When the currency price fell 60% from its high point, the mentality of "selling when the rebound returns to the capital" led to deep trapping, and the dealer had already completed the shipment.

4. Rational participation strategy: Building a defense system in fanaticism

1. Identify the market cycle phase : Monitoring Bitcoin market share is a key indicator. When the proportion is > 65%, you can gradually configure altcoins when it falls below 60%. If it falls below 50%, you need to be wary of the top of the copycat season. The current 61% share shows that the rotation is in the medium term.

2. Iron law of position management :
? Single altcoin position ≤ 5% of total funds
? High-risk assets such as meme coins≤ 2%
? Total altcoin exposure is controlled within 20%
Ensure that the single currency crash does not affect survivability.

3. Three major veto items for project screening :
? No transparent roadmap and practical applications (such as purely hyped celebrity commemorative coins)
? Circulation volume

Core conclusion: The balancing technique of fighting against human nature and utilization cycle

The essence of chasing the rise is the product of the weakness of human nature being amplified by the market mechanism . The way to solve it is:
? Acknowledge the temptation of becoming rich , but use positions to limit its destructive power
? Understand the rules of capital rotation and participate in rotation within the range of 60%-65% of Bitcoin market share
? Beware of the selling pressure trap of low circulation and high valuation projects
The real winner is not refusing to participate in the copycat season, but keeping the backdoor of retreat in the craze - because when the bubble bursts, liquidity is more important than the increase record.

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