On psychological traps behind the fantasy of āI shouldāve bought the bottom with 100x leverageā
Over the weekend just as many peeps out there, I kept asking myself the same question.
āWhat if?ā
Especially once the market sort of bounced back.
Then I decided to look at what behavioral scientists said about similar situations with stock traders. Turns out, Prospect Theory is indeed applicable to the myths and psychological reasons behind the whole āCoulda - shoulda - wouldaā of crypto trading.
āI Wouldāve Bought the Bottomā ā No, You Wouldnāt Have
The market nuked and bounced in a matter of minutes.
And now comes the chorus:
āBro if I had just longed the bottom with 50xā¦ā
āIt was so obvious in hindsight.ā
āCouldāve printed life-changing money.ā
But you didnāt.
Letās talk about why that fantasy is almost never true ā not because youāre dumb, but because youāre human. And humans are wired to remember selectively, predict poorly, and misjudge both past and future pain.
The Fantasy Timeline vs. The Real One
In the fantasy timeline, you wait patiently, emotions in check, spot the exact ATL, size your position perfectly, crank the leverage, and ride a clean bounce straight into early retirement.
In the real timeline, hereās what happens:
- You think itās the bottom
- You enter too early
- You get liquidated
- You repeat this 2ā3 times
- You either give up or have no capital left by the time the real bottom arrives
(certain variations are expected here but you get the jist)
So why do so many people still believe they wouldāve nailed it?
1. Retrospective Simplicity
The mind compresses chaos.
When you look back, the chart looks obvious. But in real-time? Every bounce looks like the bounce. Every dip may feel like the bottom.
In behavioral science, this is more than just hindsight bias ā itās retrospective determinism: the illusion that the past was orderly, predictable, and fit into a clear narrative.
āOf course it bounced there. It was the obvious liquidity sweep.ā
No. It feels obvious because it already happened.
2. Counterfactual Rehearsal Loops
Your brain doesnāt just recall what happened ā it rehearses what didnāt.
āIf I just bought at the bottomā¦ā
āIf I held through the painā¦ā
This isnāt learning ā itās counterfactual rumination, and it wires you deeper into regret, not clarity.
Studies show that people will re-live near-misses more vividly than actual outcomes ā like traders who almost went long at the bottom feel worse than those who didnāt even notice the dip.
Thatās not insight. Thatās self-punishment disguised as analysis.
3. Time Compression & Emotional Amnesia
Your memory of how fast it all happened? Wrong.
Your sense of how stressed you were? Also wrong.
In high-volatility moments, time dilates emotionally ā you feel like youāre in the market for days when it's only been minutes. Every candle is a threat. Every bounce is fake. Your heart rate tells you to exit now.
But weeks later, you only see a clearer picture. The tension is gone. Your body forgets the fear. And so you assume you couldāve calmly executed the perfect long.
You werenāt calm. You were cooked.
4. Illusion of Control & Roleplay Bias
Most people think theyāre the āmain characterā of the trade. They imagine the win as if they were in control of it ā despite all evidence to the contrary.
Psychologists call this the illusion of control ā overestimating your influence over outcomes driven by luck, timing, and volatility.
But in crypto, it often gets worse: roleplay bias ā mentally inserting yourself into someone elseās successful trade, as if you wouldāve made the same decisions with the same conviction.
You didnāt ride it. But your brain thinks you did.
5. Post-Traumatic Rationalization
This one cuts deep.
After a drawdown, we canāt just say āI panicked.ā
Instead, we rewrite the story: āI was being careful.ā
We justify the early exit. We justify the late entry.
