Life goes well for Cryptocurrencies.
But human nature reveals that we make decisions based on fear, greed, panic and irrationality. And we don't know how long each of these feelings can last.
What we call “emotional investment cost” is the emotion that comes from not knowing about the future, about risk. Risk is what the market rewards. If there was no risk, there would be no return associated with the investment in the capital market.
Consider this bet: heads win 25 euros, tails lose 20 euros. Would you accept? What if you were winning 100 euros during the course of betting? Would you give up, thus “closing” the gains? Would you continue because you are on a “lucky streak”? What if you were losing those 100 euros? Would it change your view on a new bet?
This could be the motto for a bubbling economic activity.
In an August article in the Financial Times, Rana Foroohar wrote that the collapse of tourism could trigger the next phase of the economic crisis.