Recency bias
Why does a short run of strong weeks make the latest data feel like the whole picture?
In plain words
Recency bias is the tendency to give the most recent events more weight than older ones when judging what comes next. A few strong weeks can feel like a durable trend, even when the market sits far below levels reached a year earlier.
Why it matters
Risk judged from a narrow window misses the full range of outcomes. Position size, return expectations and tolerance for a reversal all shift when a handful of weeks dominate the picture, while the longer record that would temper them fades from view.
In a real week: ETH, week of 16 January 2023
ETH rose 4.83% in the week of 16 January 2023, following a 20.34% gain one of the prior four weeks, with three of those four weeks up. Yet ETH remained 54.09% below its 52-week high, and the week's return sat at the 64.0 percentile against 257 weeks of history.
A common mistake
Reading a cluster of up weeks as proof of a new trend. Recent weeks describe what already happened; a percentile against the full history shows how unusual it actually was.