DYθR founder's in-depth analysis: Decryption of group behavior code behind the rise and fall of token prices

Source: The Psychology Behind Every Token Pump

Organize & compile: Lenaxin, ChainCatcher

There are specific patterns in the market perception of token issuance, which originates from long-term evolutionary laws of market behavior.

The price discovery mechanism of crypto markets shows significant behavioral finance characteristics: market participants have a widespread tendency to rely on paths, and their investment decisions are often dominated by previous profit experience rather than based on the intrinsic value of assets. This collective memory-driven market behavior leads investors to continue to copy historical successful strategies and form an irrational pursuit of specific price ranges.

The current participants in the crypto market come from different periods: including early investors who entered the market before 2018, major groups who entered the market after 2020, and newly added on-chain user groups in the past three years. Different groups' perceptions of token issuance vary due to their experiences, resulting in completely different emotions and expectations about the same event.

1. Participants in the 2018 period still value clarity, focusing on roadmap, token economics, practicality and vision. They need the team's proof of work, market attention, and preferably actual income. These are the thinking patterns in the ICO era. After experiencing cyclical fluctuations, they tend to choose projects that are constantly developing.
2. Participants entering the market after 2020 pursue shortcuts. Most people still hold tokens recommended by KOL, full of luck. They don’t care about the essence of the project, they only care whether someone will take over at a higher price. Patience is limited, but expectations are unlimited.
3. Recently, on-chain participants are pursuing fast money or short-term stimulation. They are radical, quick and everywhere, participating in all mining, following all projects, winning points, and chasing every hot spot. But expectations are too high, even if you make a profit of thousands of dollars, you still feel that it is insufficient, and you trade frequently until you lose money. Most people are deeply trapped in it and find it difficult to get out of it.
   These three types of participants are in three different psychological states, which we call "intersubject consensus space".

The "intersubjectivity" of the crypto market goes beyond the scope of philosophy and presents an observable market dynamics phenomenon. When groups jointly believe in specific market narratives and visualize them through collaborative behaviors, temporary price consensus is formed.

Such collective beliefs constitute the core transmission mechanism of market fluctuations: heterogeneous investor groups achieve cognitive resonance through continuous interaction, which is specifically manifested as multiple market behaviors such as mutual verification, coordinated momentum and price defense.

The tribal effect spawned by this mechanism significantly amplifies market fluctuations, and its essence is a belief network built by high-risk preferentialists through early cognitive investment - these market prophets completed consensus layout before narrative verification at the cost of excessive risk.

When the token realizes its expected value, investors will develop deep emotional connections - from a simple coin holder to a community co-builder deeply bound to the token value. These core members naturally evolve into market spokespersons for the project, and continuously strengthen and expand the consensus field by creating hot topics, spreading cultural memes, and developing community members.

Hyperliquid's case confirms this mechanism: the strong consensus group constructed by early believers receives positive feedback through airdrop rewards, and this "faith monetization" empirical further strengthens group beliefs, and ultimately forms a self-reinforced value creation cycle.

The meme coins BONK, WIF, POPCAT and other phenomena confirm the primary driving force of group consensus. The essential characteristics of the crypto market are: price narrative and market indicators.

Before the token rise attracts followers, we must first form a consensus of belief - this is the key role of the early groups: they create expectations with actions, which ultimately transform into the original momentum of price increases. These core participants gradually construct a widely accepted market cognitive picture through collaborative marketing, public opinion resonance and collective action.

The reflexive mechanism of the crypto market is reflected in the two-way strengthening of price and belief. Valuation enhances strengthens market confidence, while collective belief further pushes up valuation, forming a self-enhanced feedback loop.

This process shows a typical chain reaction:
Prices rise trigger investment behavior → The rise is interpreted as value verification → Market performance is transformed into communication materials → Form an attractive investment narrative → Attract incremental funds to enter the market → Promote a new round of price increases

There are significant differences in drivers across asset classes:

• Meme Coin: Social Culture Identity
• DeFi protocol: cash flow capture capability
• Intelligent Agent: A Narrative of Technology Innovation

Market evolution always follows the basic law of "early consensus-driven → later follow-up diffusion", and ultimately forms a complete cycle from value discovery to bubble evolution.

The essence of the takeover in the reflexive stage is to provide liquidity exports to early participants in the consensus stage. What they trade is not the value of assets, but the market illusion. This structural asymmetry constitutes the essential characteristics of the crypto market.

Market manipulation behavior runs throughout the cycle: whether it is consensus builders or reflexive participants, they maintain the "reality" framework of their construction through information manipulation, narrative weaving and cognitive distortion. This collective hypnosis leads to a single asset derive a parallel market cognitive system, forming a belief echo chamber that is separated from each other.

Investors from different cognitive dimensions show significant behavioral differences: different holding logic, differentiated expected targets, and discrete exit points. This cognitive fragmentation directly leads to amplification of market volatility and is accompanied by extreme swings of fear and greed.

Ultimately, most participants were trapped in a self-constructed cognitive cage. The initial investment rationality was replaced by anxiety of diminishing marginal utility, leaving only a pathological concern for potential losses.

When the market collapses, investors not only suffer financial losses, but also the collapse of the cognitive system - the former carnival holy place has become a place for collective whine.

The biggest winner in the price discovery process is always the early consensus builder, but the realization of its excess returns still depends on continuous exceeding expectations of price performance. Only in this way can it ensure that it completes its exit with uneroded beliefs.

The market essence revealed above is: the price formation mechanism is essentially a concrete manifestation of group cognitive coordination , and its dynamic process depends entirely on the degree of synchronization of market participants' perception of value, the level of confidence in the dominant narrative, and the intensity of consistency of collective actions.

Be sure to be clear at all times:

• What stage are you in?
• What kind of "reality" construction should be participated in?
• And what expectations to hold drive the tokens up.

The clearer your psychological positioning is, the better the results you can create for your position.