{"id":22060,"date":"2025-12-18T03:47:32","date_gmt":"2025-12-18T03:47:32","guid":{"rendered":"https:\/\/cryptomag.finance\/?p=22060"},"modified":"2025-12-18T03:47:32","modified_gmt":"2025-12-18T03:47:32","slug":"bitcoin-scam-myth-exposed-how-prospect-theory-explains-investor-panic-and-losses","status":"publish","type":"post","link":"https:\/\/cryptomag.finance\/?p=22060","title":{"rendered":"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses"},"content":{"rendered":"<p>Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November.<\/p>\n<p>However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize\u2013winning prospect theory.<\/p>\n<h2>The Psychology Behind the \u201cScam\u201d Label<\/h2>\n<p>In a November 17 post on X, Perera <a href=\"https:\/\/x.com\/shanaka86\/status\/2001105559312065015?s=20\">argued<\/a> that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet.<\/p>\n<blockquote>\n<p>\u201cYou need an explanation that matches the intensity of that pain,\u201d wrote Perera. \u201c\u2019Scam\u2019 fits perfectly.\u201d<\/p>\n<\/blockquote>\n<p>The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks.<\/p>\n<blockquote>\n<p>\u201cEvery \u2018scam\u2019 call is a wealth transfer receipt,\u201d he claimed.<\/p>\n<\/blockquote>\n<p>He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50\u201360% in the current one, as evidence that volatility has been easing with maturity.<\/p>\n<p>Perera\u2019s assertions found some support among the online crypto community, with user Gary Krug <a href=\"https:\/\/x.com\/GarryKrug\/status\/2001126042241564709?s=20\">stating<\/a> that \u201cCalling Bitcoin a scam is usually a response to emotional whiplash, not analysis.\u201d He also added that markets punish impatience before they reward conviction.<\/p>\n<p>Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera <a href=\"https:\/\/x.com\/shanaka86\/status\/2001112722264707141?s=20\">replied<\/a> that humans naturally chase quick gains.\u00a0The key takeaway, according to the market observer, is that surviving Bitcoin\u2019s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation.<\/p>\n<h2>Market Strain and a Clash of Narratives<\/h2>\n<p>The \u201cBitcoin is a scam\u201d framing has landed at a time the asset is entering one of its longest \u201cextreme fear\u201d readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters.\u00a0Recently, prominent economist Steve Hanke claimed the asset has \u201czero fundamental value,\u201d <a href=\"https:\/\/cryptopotato.com\/analyst-pushes-back-on-steve-hankes-claim-bitcoin-lacks-value\/\">framing<\/a> the current downturn as proof of a failing system.<\/p>\n<p>The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today.\u00a0According to veteran analyst PlanB, selling pressure is <a href=\"https:\/\/cryptopotato.com\/veteran-analyst-explains-why-bitcoin-is-not-pumping\/\">split<\/a> between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside.<\/p>\n<p>On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves.\u00a0That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold\u2019s +65% and the S&amp;P 500\u2019s +14%.<\/p>\n<p>However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold\u2019s +141% and SPX\u2019s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time.<\/p>\n<p>The post <a href=\"https:\/\/cryptopotato.com\/bitcoin-scam-myth-exposed-how-prospect-theory-explains-investor-panic-and-losses\/\">Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses<\/a> appeared first on <a href=\"https:\/\/cryptopotato.com\/\" rel=\"nofollow\">CryptoPotato<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p><!-- wp:html --><\/p>\n<p>Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November.<\/p>\n<p>However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize\u2013winning prospect theory.<\/p>\n<h2>The Psychology Behind the \u201cScam\u201d Label<\/h2>\n<p>In a November 17 post on X, Perera <a href=\"https:\/\/x.com\/shanaka86\/status\/2001105559312065015?s=20\">argued<\/a> that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet.<\/p>\n<blockquote>\n<p>\u201cYou need an explanation that matches the intensity of that pain,\u201d wrote Perera. \u201c\u2019Scam\u2019 fits perfectly.\u201d<\/p>\n<\/blockquote>\n<p>The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks.<\/p>\n<blockquote>\n<p>\u201cEvery \u2018scam\u2019 call is a wealth transfer receipt,\u201d he claimed.<\/p>\n<\/blockquote>\n<p>He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50\u201360% in the current one, as evidence that volatility has been easing with maturity.<\/p>\n<p>Perera\u2019s assertions found some support among the online crypto community, with user Gary Krug <a href=\"https:\/\/x.com\/GarryKrug\/status\/2001126042241564709?s=20\">stating<\/a> that \u201cCalling Bitcoin a scam is usually a response to emotional whiplash, not analysis.\u201d He also added that markets punish impatience before they reward conviction.<\/p>\n<p>Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera <a href=\"https:\/\/x.com\/shanaka86\/status\/2001112722264707141?s=20\">replied<\/a> that humans naturally chase quick gains.\u00a0The key takeaway, according to the market observer, is that surviving Bitcoin\u2019s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation.<\/p>\n<h2>Market Strain and a Clash of Narratives<\/h2>\n<p>The \u201cBitcoin is a scam\u201d framing has landed at a time the asset is entering one of its longest \u201cextreme fear\u201d readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters.\u00a0Recently, prominent economist Steve Hanke claimed the asset has \u201czero fundamental value,\u201d <a href=\"https:\/\/cryptopotato.com\/analyst-pushes-back-on-steve-hankes-claim-bitcoin-lacks-value\/\">framing<\/a> the current downturn as proof of a failing system.<\/p>\n<p>The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today.\u00a0According to veteran analyst PlanB, selling pressure is <a href=\"https:\/\/cryptopotato.com\/veteran-analyst-explains-why-bitcoin-is-not-pumping\/\">split<\/a> between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside.<\/p>\n<p>On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves.\u00a0That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold\u2019s +65% and the S&amp;P 500\u2019s +14%.<\/p>\n<p>However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold\u2019s +141% and SPX\u2019s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time.<\/p>\n<p>The post <a href=\"https:\/\/cryptopotato.com\/bitcoin-scam-myth-exposed-how-prospect-theory-explains-investor-panic-and-losses\/\">Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses<\/a> appeared first on <a href=\"https:\/\/cryptopotato.com\/\" rel=\"nofollow\">CryptoPotato<\/a>.<\/p>\n<p><!-- \/wp:html --><\/p>\n","protected":false},"author":1,"featured_media":18589,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[45],"tags":[],"class_list":{"0":"post-22060","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-bitcoin"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses - Cryptomag<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptomag.finance\/?p=22060\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses - Cryptomag\" \/>\n<meta property=\"og:description\" content=\"Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November. However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize\u2013winning prospect theory. The Psychology Behind the \u201cScam\u201d Label In a November 17 post on X, Perera argued that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet. \u201cYou need an explanation that matches the intensity of that pain,\u201d wrote Perera. \u201c\u2019Scam\u2019 fits perfectly.\u201d The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks. \u201cEvery \u2018scam\u2019 call is a wealth transfer receipt,\u201d he claimed. He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50\u201360% in the current one, as evidence that volatility has been easing with maturity. Perera\u2019s assertions found some support among the online crypto community, with user Gary Krug stating that \u201cCalling Bitcoin a scam is usually a response to emotional whiplash, not analysis.\u201d He also added that markets punish impatience before they reward conviction. Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera replied that humans naturally chase quick gains.\u00a0The key takeaway, according to the market observer, is that surviving Bitcoin\u2019s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation. Market Strain and a Clash of Narratives The \u201cBitcoin is a scam\u201d framing has landed at a time the asset is entering one of its longest \u201cextreme fear\u201d readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters.\u00a0Recently, prominent economist Steve Hanke claimed the asset has \u201czero fundamental value,\u201d framing the current downturn as proof of a failing system. The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today.\u00a0According to veteran analyst PlanB, selling pressure is split between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside. On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves.\u00a0That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold\u2019s +65% and the S&amp;P 500\u2019s +14%. However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold\u2019s +141% and SPX\u2019s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time. The post Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses appeared first on CryptoPotato.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptomag.finance\/?p=22060\" \/>\n<meta property=\"og:site_name\" content=\"Cryptomag\" \/>\n<meta property=\"article:published_time\" content=\"2025-12-18T03:47:32+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptomag.finance\/wp-content\/uploads\/2025\/06\/generic-crypto-image.webp\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"560\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/webp\" \/>\n<meta name=\"author\" content=\"Crypto Magazine\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cryptomagz\" \/>\n<meta name=\"twitter:site\" content=\"@cryptomagz\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Crypto Magazine\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060\"},\"author\":{\"name\":\"Crypto Magazine\",\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/#\\\/schema\\\/person\\\/f749cd846c4f13ef717c12a20ce9d040\"},\"headline\":\"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses\",\"datePublished\":\"2025-12-18T03:47:32+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060\"},\"wordCount\":575,\"image\":{\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/cryptomag.finance\\\/wp-content\\\/uploads\\\/2025\\\/10\\\/crypto_news_cover-5ewNCs.jpg\",\"articleSection\":[\"Bitcoin\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060\",\"url\":\"https:\\\/\\\/cryptomag.finance\\\/?p=22060\",\"name\":\"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses - 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Cryptomag","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/cryptomag.finance\/?p=22060","og_locale":"en_US","og_type":"article","og_title":"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses - Cryptomag","og_description":"Bitcoin (BTC) critics have returned to a familiar refrain, calling the asset a scam as it struggles to go back to the five-figure level it last enjoyed in mid-November. However, crypto commentator Shanaka Anslem Perera has reframed the argument as a psychological response rather than a financial one, tying panic selling to Nobel Prize\u2013winning prospect theory. The Psychology Behind the \u201cScam\u201d Label In a November 17 post on X, Perera argued that steep corrections often push retail investors to search for explanations that match emotional pain. Prospect theory, developed by Daniel Kahneman and Amos Tversky and awarded the Nobel Prize in 2002, holds that losses feel roughly twice as painful as gains feel rewarding. And when Bitcoin, for example, drops 30% to 40% after euphoric buying, labeling it a scam becomes an emotional outlet. \u201cYou need an explanation that matches the intensity of that pain,\u201d wrote Perera. \u201c\u2019Scam\u2019 fits perfectly.\u201d The analyst cited data claiming that around 70% of retail traders who buy during rallies sell at a loss within a year, while long-term holders who kept Bitcoin for four years or more have historically avoided losses even when buying at cycle peaks. \u201cEvery \u2018scam\u2019 call is a wealth transfer receipt,\u201d he claimed. He also pointed to shrinking drawdowns across cycles, from more than 90% in 2011 to about 50\u201360% in the current one, as evidence that volatility has been easing with maturity. Perera\u2019s assertions found some support among the online crypto community, with user Gary Krug stating that \u201cCalling Bitcoin a scam is usually a response to emotional whiplash, not analysis.\u201d He also added that markets punish impatience before they reward conviction. Another account, Bitcoinfinity, questioned why investors struggle to build positions slowly, to which Perera replied that humans naturally chase quick gains.\u00a0The key takeaway, according to the market observer, is that surviving Bitcoin\u2019s cycles requires an extended time horizon, where traders shift from seeking quick gains to disciplined accumulation. Market Strain and a Clash of Narratives The \u201cBitcoin is a scam\u201d framing has landed at a time the asset is entering one of its longest \u201cextreme fear\u201d readings, according to market trackers, giving critics fresh ammunition while reinforcing the psychological argument raised by supporters.\u00a0Recently, prominent economist Steve Hanke claimed the asset has \u201czero fundamental value,\u201d framing the current downturn as proof of a failing system. The flagship cryptocurrency has fallen nearly 31% from its all-time high and briefly dipped near $85,000 earlier this week before rebounding toward $88,000, only to slip back to around $87,000 earlier today.\u00a0According to veteran analyst PlanB, selling pressure is split between long-term holders still shaken by 2021, technical traders watching momentum indicators, and cycle-focused investors expecting further downside. On the other side are buyers focused on fundamentals and institutional adoption, creating what he described as a stalemate until sellers exhaust themselves.\u00a0That tug-of-war has kept Bitcoin lagging traditional assets in the one-year window, with data shared by Perera showing the digital asset with an ROI of -15% compared to Gold\u2019s +65% and the S&amp;P 500\u2019s +14%. However, over longer periods, BTC has significantly outperformed the two, starting at +422% ROI in the last three years against gold\u2019s +141% and SPX\u2019s +49%. Since its invention, BTC has achieved a return of more than 2 million % while its traditional counterparts have respectively only managed +167% and +447% in that time. The post Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses appeared first on CryptoPotato.","og_url":"https:\/\/cryptomag.finance\/?p=22060","og_site_name":"Cryptomag","article_published_time":"2025-12-18T03:47:32+00:00","og_image":[{"width":1000,"height":560,"url":"https:\/\/cryptomag.finance\/wp-content\/uploads\/2025\/06\/generic-crypto-image.webp","type":"image\/webp"}],"author":"Crypto Magazine","twitter_card":"summary_large_image","twitter_creator":"@cryptomagz","twitter_site":"@cryptomagz","twitter_misc":{"Written by":"Crypto Magazine","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/cryptomag.finance\/?p=22060#article","isPartOf":{"@id":"https:\/\/cryptomag.finance\/?p=22060"},"author":{"name":"Crypto Magazine","@id":"https:\/\/cryptomag.finance\/#\/schema\/person\/f749cd846c4f13ef717c12a20ce9d040"},"headline":"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses","datePublished":"2025-12-18T03:47:32+00:00","mainEntityOfPage":{"@id":"https:\/\/cryptomag.finance\/?p=22060"},"wordCount":575,"image":{"@id":"https:\/\/cryptomag.finance\/?p=22060#primaryimage"},"thumbnailUrl":"https:\/\/cryptomag.finance\/wp-content\/uploads\/2025\/10\/crypto_news_cover-5ewNCs.jpg","articleSection":["Bitcoin"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/cryptomag.finance\/?p=22060","url":"https:\/\/cryptomag.finance\/?p=22060","name":"Bitcoin \u2018Scam\u2019 Myth Exposed: How Prospect Theory Explains Investor Panic and Losses - 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