bias library
Recency bias
You weight recent events much more than their statistical significance warrants.
Tversky and Kahneman called this the availability heuristic — events that are easy to recall feel more probable than they are. A two-month bull run starts to feel like the new regime. A bad week starts to feel like the top. Memory's recency makes the present feel structural.
What it looks like in crypto
- ●Two months of green and you adjust your year-long allocation. The recent regime feels permanent until it is not.
- ●One sharp drawdown and you call the cycle over. You sell into the eventual recovery you predicted away.
- ●Narratives rotate every quarter — AI, RWAs, memes, restaking, AI again. You feel each one is the new wave. You're often wrong about which one will last.
- ●Your strategy gets revised on the latest headline. Today's news has more weight in your model than last year's structural reality.
- Before any portfolio change, zoom out. The one-year chart. The five-year chart. Compare to prior cycles. Recency shrinks when the timeframe widens.
- Mute the news feed for a day before any major decision. Information urgency rarely matches information importance.
- Keep a "what I believed three months ago" file. Read it before changing strategy. Often the older view was closer to right than today's reaction.
- Distinguish regime change from noise. Most weekly events are noise. Some quarterly events matter. Very few weekly events are regime change.
Worth knowing
Recency feels like real-time intelligence and is mostly emotional weather. The traders who hold up through cycles have built explicit pauses between the news and their portfolio. The pause is the value.
Tversky & Kahneman (1973). Availability: A Heuristic for Judging Frequency and Probability. Cognitive Psychology, 5(2), 207–232.
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