When the price itself becomes the reason to buy
Reflexivity is the idea that price and belief can feed each other in a loop: rising price makes an asset look like a good idea, which draws in more buyers, which pushes price up further, which makes it look like an even better idea. Notice that in this loop, the rising price itself is doing a lot of the persuading — not new information about the underlying project's value, but the simple, visible fact that 'number goes up.' That loop can run for a long time, because each new buyer's participation genuinely does push price higher, which reinforces the very belief that drew them in.
This is where FOMO — fear of missing out — becomes a powerful market force rather than just a personal feeling. When people watch a price rise and see others apparently profiting from it, the psychological pressure to join in can overwhelm careful analysis, especially as the move accelerates and waiting starts to feel like the riskier choice. The loop works in both directions, though: the same self-reinforcing mechanism that pulls buyers in on the way up pushes sellers out on the way down, once falling price starts to look like its own reason to sell.