Endowment effect is the tendency for investors to assign more value to assets simply because they own them. This bias can cause overconfidence, reluctance to sell, or poor portfolio rebalancing decisions. This psychological trap can lead to bag holding declining assets well beyond rational exit points.
Example:
An investor refuses to sell a token they bought at $2 even though it has fallen to $0.50, believing it’s “worth more” because they own it.