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SCIENTIFIC RESEARCH - 2026 SCIENTIFIC RESEARCH-2025
DOI: https://doi.org/10.36719/2789-6919/53/121-124
Elmar Farajov
Azerbaijan State University of Economics
Bachelor
https://orcid.org/0009-0004-1441-9723
elmarfarajov@yahoo.com
The Role of Cognitive Biases in Cryptocurrency
Investment Decisions
Abstract
Cryptocurrency markets are highly volatile and speculative, making investor behavior a critical factor in price dynamics. This study examines the role of cognitive biases in shaping investment decisions within the cryptocurrency ecosystem. Investors often rely on heuristics and mental shortcuts, which can lead to systematic errors in judgment, including overconfidence, herd behavior, loss aversion, and confirmation bias. These biases influence portfolio choices, risk perception, and timing of trades, frequently resulting in suboptimal financial outcomes. Understanding the psychological underpinnings of cryptocurrency investment can help investors mitigate bias, improve decision-making, and enhance market efficiency. The research also highlights the importance of educational interventions, structured decision frameworks, and analytical tools in counteracting the effects of cognitive biases.
Keywords: cognitive biases, cryptocurrency investment, investor behavior, decision-making, overconfidence, herd behavior, loss aversion, confirmation bias, behavioral finance, market psychology
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