A brief discussion on the reflexivity of the market: a self-fulfilling prophecy of investment
George Soros's "reflexivity theory" explains the irrational fluctuations of the market, pointing out that the market does not simply follow objective laws, but is influenced by the subjective consciousness and expectations of investors. When investors are optimistic about a project, the price of the currency rises, further enhancing investor confidence and forming a self-reinforcing cycle. Market prices not only affect investors' views, but in turn, investors' behavior also affects market trends, ultimately leading to market overreaction and subsequent corrections. This phenomenon is particularly evident in the crypto market, where investors' emotions and biases can push prices away from fundamentals.
