The Why #83: Why does everyone swear they knew crypto would boom/rebound/crash/recover?
By Dan Monheit 5th April 2024
Question from Joe, Balaclava
We all know them. The ‘obviously-that-was-going-to-happen’ type, who just love to remind you that they saw it coming all along, regardless of what ‘it’ actually ended up being.
They knew that despite every poll saying otherwise, Trump would totally win the 2016 election, that a pandemic was just around the corner (wasn’t there a TED talk about this?) and that J-Lo and Ben Affleck were destined to get back together. Obviously!
Do these people have crystal balls, a sixth sense or doctorates in celebrity pop culture? I don’t think so. And if they really were that good at picking the crypto market, you and I both know they’d be on a yacht in the Caribbean right now, not standing around talking to you Joe (no offence). So what makes them feel so sure?
The Hindsight Bias
The Hindsight Bias describes our tendency to look at an unpredictable event retrospectively and believe it was easily predictable.
In the early 1970’s Beyth and Fischhoff conducted one of the first experiments on the Hindsight Bias. They asked participants to rate the likelihood of a range of different outcomes of US President Richard Nixon’s upcoming visit to Beijing and Moscow. After the visit, those same participants were asked to recall the predictions they’d made. Guess what? Almost all of those involved believed that they’d highly rated the outcome that actually occurred (i.e. they totally saw it coming). In reality, this was not even remotely correct.
Some attribute the Hindsight Bias to our inbuilt ‘selective memory’, survivorship bias or confirmation bias. Others see it as part of a comforting story we tell ourselves; that our world is totally ‘under control’ and ‘makes sense’, based on patterns we observe that may or may not actually be there.
You see Joe, for all of their bravado, crypto-bros are just like you and I. Whilst none of us could have accurately charted the precise course for Bitcoin, Ethereum or Dogecoin, those who invested early love to say knew it all along. Call it denial, delusion or a defence mechanism, we’re all only human.
For Challenger Brands, especially those new to the scene, it can pay to help customers feel like what you’ve brought to the market is an inevitable evolution of something that’s always been there. Positioning yourself as ‘the next generation of running shoe’, ‘yesterday’s design software, rebuilt around today’s AI’ or ‘a whole new way to do insurance’ feels more familiar and less risky than launching with completely revolutionary alternatives.
Behaviourally Yours,
PS If you missed the last edition, you can still check why it feels like 2019 was just last year here.
Forwarded this? Subscribe to join thousands of others who receive The Why fortnightly.
Bad Decisions Podcast
Learn more about Behavioural Science with the Bad Decisions podcast here.
Got a question?
Is there something you’ve always wondered about?
Send it through to AskDan@hardhat.com.au
Want more?
Check out the latest piece in Dan’s fortnightly content series with Mumbrella, exploring why Challenger Brands should look for the moment most worth winning.
