Hindsight Bias

Hindsight bias, often called the knew-it-all-along effect, is the tendency for people to perceive past events as having been more predictable than they actually were. After a major crypto market crash, a trader might look at the charts and claim that the indicators clearly signaled the drop, even if they did not act on those signals at the time.

This bias creates a false sense of security regarding one's ability to forecast future market movements. It prevents traders from learning from their actual decision-making process because they rewrite their past expectations to align with the current reality.

By believing that past market moves were obvious, traders underestimate the inherent uncertainty and complexity of market microstructure and price discovery.