Crypto Investing and Unit Bias

Part of being a disciplined investor is awareness of our natural human tendencies or biases. To become aware of your unconscious biases you have to start by educating yourself.

Unit bias is the tendency for people to want to complete a unit of a given item or task.

When ordering a cheeseburger the natural bias is to eat the entire burger and complete the item.

When reading a book late in the evening who lays the book on the night stand mid chapter ?

Who buys a candy bar with the intention of only eating half of it ?

Unit bias experienced when when eating or reading a book has a similar effect on us subconsciously as crypto investors. 

This bias is the irrational perception that owning whole units of cheaper cryptocurrencies is preferable to fractions of more expensive ones. By nature we tend to associate a whole unit as having more value. I can buy 800,000 SHIB or .00049621 BTC which has approximately the same value. Without bias awareness most would naturally gravitate to buying SHIB.

It’s very easy to understand how someone coming into the crypto space could feel like they may have missed out on BTC or ETH but in their mind they can hold hundreds or thousands of a meme coin instead of just a fraction of BTC. By buying cheaper coins or tokens they are unknowingly led into much riskier investments. 

There is money to be made in low cap and micro cap cryptos but for the average retail investor you are putting your finances at risk buying crypto just because it is ” cheap “. Extremely volatile price fluctuations in a short period of time and low liquidity are just a few of the considerations.

Don’t make the mistake of confusing price with value.