Why fixating on a past high keeps people from selling

A holder bought a token near its all-time high of ten dollars. The price fell to three and stayed there for months. She refused to sell because three felt like a loss against the ten she remembered. The ten was gone — erased by a market that had moved on — but it persisted as a reference point in her mind, making every price below it feel like an injustice to be corrected. She waited for a recovery to a number the market had no obligation to revisit, and the wait cost her the chance to redeploy her capital elsewhere.

What everyone sees

A holder sees the current price below her anchor and reads a temporary discount: the token was worth ten, so three must be a bargain or a wrong that will be righted. The past high feels like the true price. The holder does not recognise the anchor as a cognitive artefact, treating it as a fair-value benchmark, and does not consider that the market may never return there and that holding is an active decision to forgo other uses of the capital.

What is actually happening

Research on anchoring and the disposition effect shows that people anchor on salient past prices — especially personal purchase prices and all-time highs — and judge current prices relative to these anchors rather than to forward-looking fundamentals. The anchor creates a reference-dependent frame in which any price below it registers as a loss, and loss aversion prevents the sale. The holder is not evaluating the investment; she is avoiding the emotional acknowledgement that the anchor is irrelevant.

Why it stays hidden

The hidden mechanism is a reference point that outlives its relevance. The past high was real once and is now a psychological artefact that distorts every subsequent evaluation. The holder measures the present against a gone standard and refuses to act until reality conforms to memory. The anchor holds her capital hostage, and the market’s indifference to her reference point is the fact she cannot absorb.