Social proof influences Bitcoin investment decisions by leading individuals to mimic the actions of others, especially in uncertain situations. When influential figures or a large number of people endorse Bitcoin, investors may feel more confident in their investment choices. This can drive new investors into the market, further increasing demand and prices. To mitigate the effects of social proof, investors should base their decisions on thorough research and personal conviction rather than solely on the actions of others.

Overconfidence bias occurs when investors overestimate their ability to predict Bitcoin's price movements, particularly during bull markets. This overconfidence can lead to excessive risk-taking and significant losses when the market turns. Investors may neglect risk management practices and fail to diversify their portfolios. To combat overconfidence bias, investors should maintain a disciplined approach, regularly review their investment strategies, and consider seeking advice from financial professionals.

Fear of Missing Out (FOMO) is a powerful driver in the Bitcoin market. When prices rise quickly, investors fear missing potential gains and rush to buy Bitcoin. This behavior can exacerbate price increases, creating a feedback loop where rising prices attract more buyers. FOMO can lead to inflated valuations and market bubbles. To manage FOMO, investors should set clear investment goals and avoid making impulsive decisions based on short-term market movements.