Source: The Psychology Behind Every Token Pump
Compiled by: Lenaxin, ChainCatcher
The market perception of token issuance follows specific patterns, which stem from long-evolved market behavioral rules.
The price discovery mechanism in the crypto market exhibits significant behavioral finance characteristics: market participants generally show a tendency for path dependence, with their investment decisions often influenced by past profit experiences rather than the intrinsic value of assets. This market behavior driven by collective memory leads investors to continuously replicate historically successful strategies, resulting in an irrational pursuit of specific price ranges.
Current participants in the crypto market come from different periods: including early investors who entered before 2018, the main group that entered after 2020, and the on-chain user group that has joined in the last three years. Different groups have varying perceptions of token issuance based on their experiences, leading to entirely different emotions and expectations regarding the same events.
- Participants from the 2018 period still value clarity, focusing on roadmaps, token economics, practicality, and vision. They require proof of the team's work, market attention, and ideally, actual revenue. These are the thought patterns from the ICO era, having experienced cyclical fluctuations, they tend to choose projects with sustainable development.
- Participants who entered after 2020 seek shortcuts. Most still hold tokens recommended by KOLs, filled with a sense of luck. They do not care about the substance of the project, only whether someone will take over at a higher price. Their patience is limited, but their expectations are limitless.
- Recent on-chain participants pursue quick money or short-term stimulation. They are aggressive, fast, and ubiquitous, participating in all mining, following all projects, accumulating points, and chasing every hot topic. However, their expectations are too high; even if they profit thousands of dollars, they still feel it is insufficient, frequently trading until they incur losses. Most are deeply trapped and find it hard to extricate themselves.
These three types of participants are in three different psychological states, which we refer to as the "inter-subjective consensus space."
The "inter-subjectivity" of the crypto market transcends philosophical categories, manifesting as observable market dynamics. When a group collectively believes in a specific market narrative and materializes it through collaborative behavior, a temporary price consensus is formed.
Such collective beliefs constitute the core transmission mechanism of market volatility: heterogeneous investor groups achieve cognitive resonance through continuous interaction, specifically manifested in mutual validation, collaborative hype, and price defense among various market behaviors.
The tribal effect spawned by this mechanism significantly amplifies market volatility; its essence is a belief network constructed by high-risk preference individuals through early cognitive investments—these market prophets complete consensus layouts at the cost of excessive risk-taking before narrative validation.
When a token realizes its expected value, investors develop a deep emotional connection—transforming from mere holders into community builders deeply tied to the token's value. These core members naturally evolve into market spokespersons for the project, continuously reinforcing and expanding the consensus field through creating hot topics, spreading cultural memes, and developing community members.
The case of Hyperliquid confirms this mechanism: the strong consensus group built by early believers receives positive feedback through airdrop rewards, and this empirical "belief monetization" further strengthens group faith, ultimately forming a self-reinforcing value creation cycle.
Meme coins like BONK, WIF, and POPCAT exemplify the primary driving force of group consensus. The essential characteristic of the crypto market is: price narrative, market indicators.
Before a token's price rise attracts followers, a belief consensus must first be formed—this is precisely the key role of the early group: they create expectations through action, which ultimately transforms into the original momentum for price increases. These core participants gradually construct a widely accepted market perception landscape through collaborative marketing, public opinion resonance, and collective action.
The reflexivity mechanism in the crypto market reflects the bidirectional reinforcement of price and belief. Valuation increases strengthen market confidence, while collective belief further drives up valuation, forming a self-enhancing feedback loop.
This process presents a typical chain reaction:
Price increases trigger investment behavior → The upward trend is interpreted as value validation → Market performance transforms into dissemination material → Forms an attractive investment narrative → Attracts incremental funds into the market → Drives a new round of price increases
The driving factors for different asset classes exhibit significant differences:
- Meme coins: Community cultural identity
- DeFi protocols: Cash flow capture ability
- Smart agents: Technological innovation narrative
Market evolution always follows the basic rule of "early consensus-driven → late-following diffusion," ultimately forming a complete cycle from value discovery to bubble evolution.
The buyers in the reflexivity phase essentially provide liquidity exits for early participants in the consensus phase. They are trading not the asset's value, but the market illusion. This structural asymmetry constitutes the essential characteristic of the crypto market.
Market manipulation behaviors run through the entire cycle: whether consensus builders or reflexive participants, they maintain their constructed "reality" framework through information manipulation, narrative weaving, and cognitive distortion. This collective hypnosis leads to individual assets deriving parallel market perception systems, forming fragmented belief echo chambers.
Investors with different cognitive dimensions exhibit significant behavioral differences: holding logic varies, expected goals diverge, and exit timing is discrete. This cognitive fragmentation directly leads to amplified market volatility, accompanied by extreme swings of fear and greed.
Ultimately, most participants are trapped in their self-constructed cognitive cages. The initial investment rationality is replaced by anxiety over diminishing marginal utility, leaving only a pathological focus on potential losses.
When the market crashes, investors suffer not only financial losses but also the collapse of their cognitive systems—the once-celebrated sanctuary turns into a place of collective mourning.
The biggest winners in the price discovery process are always the early consensus builders, but the realization of their excess returns still relies on continuously exceeding expected price performance; only in this way can they ensure an exit with their uncorrupted beliefs intact.
The market essence revealed above is: the price formation mechanism is essentially a manifestation of collective cognitive collaboration, and its dynamic process entirely depends on the degree of synchronization of market participants' value perception, the confidence level in the dominant narrative, and the strength of collective action consistency.
Always remain acutely aware of:
- Which stage you are in,
- What kind of "reality" you are participating in constructing,
- And what expectations you hold that drive the token's rise.
The clearer your self-psychological positioning, the better results you can create for your holdings.
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