What is "Reflexivity"? Why in the crypto market should we forget "professionalism" and understand "emotion"!

When 1 million retail investors all believe that a certain coin will rise to $1, their buying behavior itself will push the price up, and the rising price will attract more retail investors to enter!

——This is what Soros called reflexivity.

Soros's theory of reflexivity can be simply summarized as: cognition influences reality, and reality in turn reinforces cognition.

On your first day in the crypto world, many people come with traditional market thinking: reading whitepapers, analyzing technicals, studying fundamentals, trying to use a "rational model" to find the next hundredfold coin.
Then they find that the hottest coins often have no technological breakthroughs, no real-world applications, and sometimes nothing but a meme — yet they keep rising to make you question everything.

This is precisely the most authentic side of the crypto world:
It’s not a rational game of institutional pricing, but a reflexive battlefield driven by retail sentiment.

1. Crypto prices are not determined by fundamentals but by collective emotion

When you see a meme coin suddenly start to surge, your first reaction might be: "What’s the value in this?"
But the market response is: 1 million people simultaneously believe "it will rise," and then they start buying — buying pushes the price higher, and rising prices attract more believers.
This is what Soros called reflexivity: believing itself can make belief come true.

In crypto, a tweet, a meme, or a community consensus can all become fuel for a price explosion.
You’re not investing in technology; you’re investing in emotion.

2. "Professional analysis" often fails in the face of emotion

Not because professionalism is useless, but because at this stage, the market’s core driving force isn’t logic, but psychology.
When FOMO spreads, all technical indicators may temporarily fail; when a narrative forms, no one cares if the code is perfect.
Trying to analyze a meme coin with a "valuation model" is like using a thermometer to measure wind speed — the tool is used in the wrong place.

3. Embracing reflexivity doesn’t mean giving up thinking

On the contrary, it requires sharper perception:

· Instead of asking "Is this project good?", ask "How many people believe it’s good?"
· Pay attention to social media trends, community activity, search volume data
· Identify early signals of narrative lifecycle, rather than waiting for "fundamental confirmation"

The emotion cycle itself is an observable, trackable "fundamental."

4. The survival rule in crypto: from "correcting the market" to "understanding the market"

Traditional financial education makes us think "the market is wrong, I’ll wait for it to correct," but in crypto, the so-called "error" can last a long time, long enough for the bearish to exit.
The real shift is:
No longer fighting emotion, but learning to recognize, understand, and even leverage emotional cycles.

5. Simple, but not easy

Letting go of obsession with complexity doesn’t mean blindly following the trend.
Simplifying the analysis framework strengthens your perception of market psychology.
What you need to judge is not "what is it worth," but "how many people believe this story, and how many will believe it in the future."

The cruelest and fairest thing in crypto is: it doesn’t reward the "correct" people, only those who "adapt to the rules."
When the market is driven by emotion, understanding emotion is the greatest professionalism!$SOL