Keep your excitement for next year's halving in check. Here comes "Goodhart's Law"

I love market psychology and how most things we talk about here day-to-day are actually known behaviours for many decades. Crypto might be new, but the psychology behind buying and selling isn't. So with several posts here about next year's halving event and people's expectations, it's time to once again talk about good ol' Goodhart!

Goodhart's law is a principle that states the outcome of a metric-driven decision can be very different from what is intended. The law is especially relevant when it comes to market psychology as its often used to evaluate and make decisions about crypto investments.

An example of Goodhart's law in action would be when it comes to the trading patterns of a coin. For examloe if it's been observed that the coin tends to trade lower on Sundays, then as soon as people notice this trend they start buying on Sundays which in return causes the prices to go up on that day. This shows that as soon as people become aware of a pattern they tend to act on it and this causes the pattern to resolve itself.

While it seems obvious on first glance, knowing about Goodhart's law and actively keeping a focus on it can be very helpful when making decisions about buying and selling cryptocurrencies. You can use this knowledge to your advantage by being aware of market trends and making informed decisions based on that. For example, if you see a pattern emerging you can make a decision to buy or sell based on the likelihood of the pattern resolving itself. Or you could accept that you missed a change in the market and might not want to jump on, once it is known to the general public.

There is a lot more to this law, but I'll try and keep it bite-sized. You can always ask questions or do more reading about it yourself. Anyhow I hope I managed to highlight the importance of market psychology and how its impact can be super helpful on buying and selling decisions. By understanding and being aware of Goodhart's law, you can really increase you ability to make reasonable and successful decisions in terms of when to buy, sell or hold.

TL;DR: if everyone expects the prices to rise after the halving, that makes it actually more likely that they won't.