The post How Prospect Theory Explains Investor Panic and Losses appeared on BitcoinEthereumNews.com. Home » Crypto News Calling Bitcoin a scam reflects investorThe post How Prospect Theory Explains Investor Panic and Losses appeared on BitcoinEthereumNews.com. Home » Crypto News Calling Bitcoin a scam reflects investor

How Prospect Theory Explains Investor Panic and Losses

For feedback or concerns regarding this content, please contact us at crypto.news@mexc.com

Home » Crypto News


Calling Bitcoin a scam reflects investor psychology, not fundamentals, with prospect theory explaining panic selling after sharp drops.

‘;
}

function loadTrinityPlayer(targetWrapper, theme,extras=””) {
cleanupPlayer(targetWrapper); // Always clean first ✅
targetWrapper.classList.add(‘played’);
// Create script
const scriptEl = document.createElement(“script”);
scriptEl.setAttribute(“fetchpriority”, “high”);
scriptEl.setAttribute(“charset”, “UTF-8”);

const scriptURL = new URL(`https://trinitymedia.ai/player/trinity/2900019254/?themeAppearance=${theme}${extras}`);
scriptURL.searchParams.set(“pageURL”, window.location.href);

scriptEl.src = scriptURL.toString();

// Insert player
const placeholder = targetWrapper.querySelector(“.add-before-this”);
placeholder.parentNode.insertBefore(scriptEl, placeholder.nextSibling);
}

function getTheme() {
return document.body.classList.contains(“dark”) ? “dark” : “light”;
}

// Initial Load for Desktop
if (window.innerWidth > 768) {

const desktopBtn = document.getElementById(“desktopPlayBtn”);
if (desktopBtn) {
desktopBtn.addEventListener(“click”, function () {
const desktopWrapper = document.querySelector(“.desktop-player-wrapper.trinity-player-iframe-wrapper”);
if (desktopWrapper) loadTrinityPlayer(desktopWrapper, getTheme(),’&autoplay=1′);
});
}
}

// Mobile Button Click
const mobileBtn = document.getElementById(“mobilePlayBtn”);
if (mobileBtn) {
mobileBtn.addEventListener(“click”, function () {
const mobileWrapper = document.querySelector(“.mobile-player-wrapper.trinity-player-iframe-wrapper”);
if (mobileWrapper) loadTrinityPlayer(mobileWrapper, getTheme(),’&autoplay=1′);
});
}
function reInitButton(container,html){
container.innerHTML = ” + html;
}

// Theme switcher
const destroyButton = document.getElementById(“checkbox”);
if (destroyButton) {
destroyButton.addEventListener(“click”, () => {
setTimeout(() => {
const theme = getTheme();
if (window.innerWidth > 768) {
const desktopWrapper = document.querySelector(“.desktop-player-wrapper.trinity-player-iframe-wrapper”);
if(desktopWrapper.classList.contains(‘played’)){
loadTrinityPlayer(desktopWrapper, theme,’&autoplay=1′);
}else{
reInitButton(desktopWrapper,’Listen‘)
const desktopBtn = document.getElementById(“desktopPlayBtn”);
if (desktopBtn) {
desktopBtn.addEventListener(“click”, function () {
const desktopWrapper = document.querySelector(“.desktop-player-wrapper.trinity-player-iframe-wrapper”);
if (desktopWrapper) loadTrinityPlayer(desktopWrapper,theme,’&autoplay=1’);
});
}
}
} else {
const mobileWrapper = document.querySelector(“.mobile-player-wrapper.trinity-player-iframe-wrapper”);
if(mobileWrapper.classList.contains(‘played’)){
loadTrinityPlayer(mobileWrapper, theme,’&autoplay=1′);
}else{
const mobileBtn = document.getElementById(“mobilePlayBtn”);
if (mobileBtn) {
mobileBtn.addEventListener(“click”, function () {
const mobileWrapper = document.querySelector(“.mobile-player-wrapper.trinity-player-iframe-wrapper”);
if (mobileWrapper) loadTrinityPlayer(mobileWrapper,theme,’&autoplay=1′);
});
}
}
}
}, 100);
});
}
})();



Summarize with AI



Summarize with AI

Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November.

However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize–winning prospect theory.

The Psychology Behind the “Scam” Label

In a November 17 post on X, Perera argued that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet.

The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks.

He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50–60% in the current one, as evidence that volatility has been easing with maturity.

Perera’s assertions found some support among the online crypto community, with user Gary Krug stating that “Calling Bitcoin a scam is usually a response to emotional whiplash, not analysis.” He also added that markets punish impatience before they reward conviction.

Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera replied that humans naturally chase quick gains. The key takeaway, according to the market observer, is that surviving Bitcoin’s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation.

You may also like:

Market Strain and a Clash of Narratives

The “Bitcoin is a scam” framing has landed at a time the asset is entering one of its longest “extreme fear” readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters. Recently, prominent economist Steve Hanke claimed the asset has “zero fundamental value,” framing the current downturn as proof of a failing system.

The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today. According to veteran analyst PlanB, selling pressure is split between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside.

On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves. That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold’s +65% and the S&P 500’s +14%.

However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold’s +141% and SPX’s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time.

SPECIAL OFFER (Exclusive)

SECRET PARTNERSHIP BONUS for CryptoPotato readers: Use this link to register and unlock $1,500 in exclusive BingX Exchange rewards (limited time offer).

Source: https://cryptopotato.com/bitcoin-scam-myth-exposed-how-prospect-theory-explains-investor-panic-and-losses/

Market Opportunity
Notcoin Logo
Notcoin Price(NOT)
$0.0003594
$0.0003594$0.0003594
+1.84%
USD
Notcoin (NOT) Live Price Chart
Disclaimer: The articles reposted on this site are sourced from public platforms and are provided for informational purposes only. They do not necessarily reflect the views of MEXC. All rights remain with the original authors. If you believe any content infringes on third-party rights, please contact crypto.news@mexc.com for removal. MEXC makes no guarantees regarding the accuracy, completeness, or timeliness of the content and is not responsible for any actions taken based on the information provided. The content does not constitute financial, legal, or other professional advice, nor should it be considered a recommendation or endorsement by MEXC.

You May Also Like

Aave DAO to Shut Down 50% of L2s While Doubling Down on GHO

Aave DAO to Shut Down 50% of L2s While Doubling Down on GHO

The post Aave DAO to Shut Down 50% of L2s While Doubling Down on GHO appeared on BitcoinEthereumNews.com. Aave DAO is gearing up for a significant overhaul by shutting down over 50% of underperforming L2 instances. It is also restructuring its governance framework and deploying over $100 million to boost GHO. This could be a pivotal moment that propels Aave back to the forefront of on-chain lending or sparks unprecedented controversy within the DeFi community. Sponsored Sponsored ACI Proposes Shutting Down 50% of L2s The “State of the Union” report by the Aave Chan Initiative (ACI) paints a candid picture. After a turbulent period in the DeFi market and internal challenges, Aave (AAVE) now leads in key metrics: TVL, revenue, market share, and borrowing volume. Aave’s annual revenue of $130 million surpasses the combined cash reserves of its competitors. Tokenomics improvements and the AAVE token buyback program have also contributed to the ecosystem’s growth. Aave global metrics. Source: Aave However, the ACI’s report also highlights several pain points. First, regarding the Layer-2 (L2) strategy. While Aave’s L2 strategy was once a key driver of success, it is no longer fit for purpose. Over half of Aave’s instances on L2s and alt-L1s are not economically viable. Based on year-to-date data, over 86.6% of Aave’s revenue comes from the mainnet, indicating that everything else is a side quest. On this basis, ACI proposes closing underperforming networks. The DAO should invest in key networks with significant differentiators. Second, ACI is pushing for a complete overhaul of the “friendly fork” framework, as most have been unimpressive regarding TVL and revenue. In some cases, attackers have exploited them to Aave’s detriment, as seen with Spark. Sponsored Sponsored “The friendly fork model had a good intention but bad execution where the DAO was too friendly towards these forks, allowing the DAO only little upside,” the report states. Third, the instance model, once a smart…
Share
BitcoinEthereumNews2025/09/18 02:28
New Crypto Investors Are Backing Layer Brett Over Dogecoin After Topping The Meme Coin Charts This Month

New Crypto Investors Are Backing Layer Brett Over Dogecoin After Topping The Meme Coin Charts This Month

Climbing to the top of the meme coin charts takes more than a viral mascot or celebrity tweets. Hype may spark attention, but only momentum, utility, and adaptability keep it alive. That’s why the latest debate among crypto enthusiasts is catching attention. While Dogecoin remains a household name, a new player has entered the arena […] The post New Crypto Investors Are Backing Layer Brett Over Dogecoin After Topping The Meme Coin Charts This Month appeared first on Live Bitcoin News.
Share
LiveBitcoinNews2025/09/18 00:30
US Fed Slashes Interest Rates by 25 BPS: How Will Bitcoin’s Price React?

US Fed Slashes Interest Rates by 25 BPS: How Will Bitcoin’s Price React?

BTC experienced some enhanced volatility during the day, what's next?
Share
CryptoPotato2025/09/18 02:05