The Greater Fool Theory

Concept: The Greater Fool Theory in behavioral finance posits that one can gain from buying overvalued assets by selling them to someone else ("a greater fool") who is willing to pay an even higher price. As long as market participants believe they can offload the asset at a higher price, the price can keep rising.

Crypto: The crypto market often experiences dramatic price increases fueled by speculative buying. It’s important to consider whether you might be purchasing from someone who is hoping to find a "greater fool" to buy at an even higher price. This perspective can help you evaluate your portfolio and avoid making impulsive decisions driven by FOMO or mimetic influences. If you are already invested, be mindful of timing your exit to avoid becoming the "greatest fool" left holding an unsellable asset. Before making a move, ensure there’s solid demand that aligns with your strategy and timeframe.