The Investment Uncanny Valley: Narrative Realism, Cognitive Dissonance, and Behavioral Biases in Cryptocurrency Markets

This study investigates the phenomenon of the “Investment Uncanny Valley” by integrating Uncanny Valley Theory, Cognitive Dissonance Theory, Behavioral Finance, and Prospect Theory into a multidisciplinary framework for analyzing cryptocurrency investors’ psychological trajectories. Through a systematic literature review and the construction of a multi-phase model, the research demonstrates how hyperrealistic narrative construction and technological packaging can generate investor expectations that, when violated by discrepancies in intrinsic value, trust, or market performance, induce intense psychological distress. Key drivers include cognitive dissonance, loss aversion, overconfidence, anchoring bias, and herding behavior, all exacerbated by information asymmetry and social influence. A five-stage formation model of the Investment Uncanny Valley is proposed, explaining the dynamic escalation from narrative immersion to emotional breakdown. The findings offer practical recommendations for individual investors, financial educators, industry actors, and regulators. This study argues that the narrative-driven and decentralized characteristics of cryptocurrency markets constitute fertile ground for hyperreal expectations and investment trauma, underscoring the need for enhanced financial literacy and supervisory interventions in emerging asset environments.