Badwagon Effect

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The bandwagon effect refers to the tendency for people to follow trends, attitudes, or actions of others simply because they see many others doing the same. In cryptocurrency, this effect occurs when individuals start buying a particular crypto solely because they notice others doing so, or after hearing about a significant price increase.

As a result, this can lead to the overvaluation of a crypto as people invest without considering its fundamental value. When the trend eventually reverses, panic selling may occur among investors, causing a sharp drop in token prices.

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