Unit Bias and Bitcoin
Happy Bitcoin Friday! — Jun. 20, 2025
Unit Bias and Bitcoin
In the context of investing, unit bias refers to the tendency of investors to prefer whole units of assets—like buying one full share of a stock—rather than fractional shares, even when fractional investing is possible and more financially sensible.
Let’s talk unit bias as it relates to bitcoin.
Bitcoin
One bitcoin is worth over $100,000.
That feels expensive to non-bitcoiners.
Even lower price levels that bitcoin traded at such as $20,000, $30,000, or $40,000 in prior market cycles gave newcomers the impression that owning bitcoin was somewhat unattainable. It’s a natural psychological phenomenon seen when talking about unit bias within the context of investing.
How Unit Bias Manifests in Investing:
Avoidance of Fractional Shares:
Investors may avoid buying 0.5 shares of a high-priced stock (like Amazon or Tesla) because it feels incomplete or less legitimate, even though the fractional share has the same proportional value and potential return.
Preference for "Round Numbers":
Investors might buy 10 or 100 shares of a stock instead of 9 or 87, simply because round numbers feel more satisfying or "complete."
Psychological Anchoring:
Some investors may perceive a stock priced at $50 as "cheaper" or more accessible than one priced at $500, even if the latter has better fundamentals or growth potential.
All of these apply to bitcoin.
Avoidance of Fractional Shares
You can own as little as one one-hundred millionth of a bitcoin. It’s called a “Satoshi” and it’s the smallest unit of bitcoin you can hold or transact with.
The “fractional shares” of bitcoin are even more accessible than when it comes to buying stocks as owning fractional shares in equities often depends on whether your brokerage provider allows it. The “fractional” nature of bitcoin is native to bitcoin. You can own as little as one Satoshi.
Preference for “Round Numbers”
I talk about this one a lot when it comes to price action, but the same thing applies to bitcoin ownership. Excuses for not buying bitcoin often include someone’s inability to buy 1 BTC or even the lesser “fractional” shares that are round numbers in their own right such as 0.25 or 0.50 BTC.
The reality is that the vast majority bitcoiners own fractional shares of bitcoin. I personally dollar cost average into bitcoin (now every other week) with a certain percentage of my income. That investment amount can change over time and the amount of bitcoin it’s able to buy constantly changes due to market price action. The important aspect of this acquisition strategy is simply sticking to it over time.
Psychological Anchoring
This is a big one that tends to turn people off from bitcoin before they even get to the first two. Again, $100,000 per bitcoin feels expensive. So, newcomers see that and often look for alternative cryptocurrencies (altcoins) that are cheaper and perceived as similar to bitcoin when the reality is that they are not related to bitcoin in any way.
Avoiding bitcoin due to unit price concerns also ignores any larger long term investment strategy or potential for growth.
Bitcoin's Compound Annual Growth Rate (CAGR) since its inception in 2009 is between 65% and 80%. Even more recent, lower, bitcoin CAGR is well above traditional investing benchmarks such as the S&P 500.
The Takeaway
Just get started.
Don't let unit bias get in the way.
Avoidance due to unit bias is irrational but unit bias is very strong and can be difficult to overcome. This applies to bitcoin as much as it does to traditional investing.
Be mindful of it, zoom out, and consider a larger, more long term, strategy.
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Enjoy the weekend!
I am not an investment or financial advisor. All opinions expressed are mine alone. Read the full DISCLAIMER on the About page.
HODL on Garth.