The cryptocurrency world is vast and complex, making it difficult even for experienced investors to learn all the ins and out of the market. There’s an entire ecosystem created around this new asset class, with an incredibly intricate infrastructure that has its own rules, tools and operating mechanisms.
As if things weren’t complicated enough, FOMO and FUD are making it even harder for users to navigate the cryptocurrency environment and make sound investing decisions. Not only because they need to decipher these strange-sounding acronyms that make up the crypto lingo but also because most investors have to deal with what these concepts represent on a regular basis.
If you’re familiar with what’s going on in the crypto scene, or if you’re a trader yourself, you’ve surely heard of these two terms before. And even if you haven’t, you’ve most probably experienced the feelings they refer to. So, if you want to learn more about crypto FOMO and FUD and how to avoid them, this article will provide you with the necessary information.
What is FOMO?
FOMO is an acronym for fear of missing out, and just as the name implies, it refers to the emotional response stemming from the irrational belief that something exciting or interesting may be happening elsewhere and others are taking advantage of it while you’re missing out on important opportunities. FOMO can be experienced in many different environments and situations, but in a crypto context, it describes an intense feeling of anxiety people get when they feel like everyone else is making a profit by investing in a certain token and they’re not.
This typically happens when an asset increases in price or when the market is going through a period of growth, and crypto users are feeling tempted to join in solely because of the hype and the fear they may miss out on a profitable investment. FOMO is usually driven by the intense use of social media and the constant influx of information coming from all sides that make people compare their lives and experiences to what they see online. However, FOMO can also be used as a marketing tactic to drive interest in certain products or services and trick consumers into making a purchase.
FOMO can cause you to make irrational decisions and buy an asset without conducting proper research. This exposes you to all sorts of risks, from making a poor investment decision and experiencing major losses as a result to falling victim to a crypto scam.
What is FUD?
FUD is a term that stands for fear, uncertainty and doubt. This concept describes the fear, uncertainty and doubt caused by the negative and often misleading information about a cryptocurrency spread through the media, with the purpose of manipulating the masses. Unlike FOMO, which is usually experienced at an individual level, FUD is a technique with a wider approach that targets not only people’s perceptions but the market as a whole.
When FUD sets in, it tends to have a ripple effect, making traders sell their assets, regardless of their value, and leading to a significant price decline for the cryptos that were targeted. This will have a direct impact on all stakeholders and change the dynamics in the market.
Usually, FOMO and FUD go hand in hand as they’re closely related, having fear as a common denominator. Both take advantage of strong emotions to influence trading decisions and can lead to further volatility in a market that is already influenced by a series of other factors causing unpredictable price swings.
How to overcome FOMO and FUD while investing in crypto?
It’s often said that emotions have no place in investing, as they can lead to over trading or trading impulsively, and that can have all sorts of negative effects on your portfolio. And yet, it can be very difficult to detach yourself from your emotions, especially when you’re new to crypto trading. That’s why you need to learn how to control your emotions and overcome FOMO and FUD if you want to make sound investing decisions.
Educate yourself on crypto investing
Before you go into crypto investing, you need to gain a good grasp of the market and all the factors that may play a part in your investment journey. Investing in crypto can be a risky business, so expanding your knowledge in the field is paramount for keeping risks and hazards at bay.
You should have a solid understanding of the assets you plan to invest in before making a purchase. So, if you want to invest in Ethereum, for example, you’ll need to research the project first. After you’ve covered the basics, you can learn how to buy Ethereum and add it to your portfolio.
Set clear objectives
It’s also wise to establish a clear objective before starting your crypto journey. Do you want to trade crypto as a side hustle, or would you like to become a professional investor and make a living out of it? Ask yourself how much money you are willing to invest, how you want to invest it, and what you want to accomplish as a crypto trader. You can go back to your objective list every time FOMO and FUD threaten to throw you off track.
Have a plan and stick to it
A trading plan can serve as a roadmap that will point you in the right direction when faced with multiple choices. This usually involves determining your capital, and deciding on a stop loss, entry point, and target sell point. With a solid trading strategy in mind, the risk of being influenced by FOMO and FUD will be greatly reduced.
Stay informed
The crypto market moves at a very fast pace, so there are many developments you need to keep your eye on if you want to invest smartly. Make sure you select and verify your sources, so you don’t fall prey to misinformation.
FOMO and FUD will always be roaming around in the crypto environment, but if you take the right approach to crypto investing, you can become immune to them.
