You’ve probably heard of “FOMO” before. It’s the “fear of missing out.” Usually, it’s when you’re worried that you’re going to miss out on something fun that everybody else is doing. But in the world of cryptocurrency, the popular acronym has a slightly different meaning. Here’s what FOMO is all about in the context of crypto.
FOMO and Cryptocurrency
Missing a party because you’re stuck working late? Regretting not investing in a now-hugely popular coin? Both these emotions are FOMO, or fear of missing out. Typically, FOMO tends to affect younger people, especially millennials. Though this acronym is largely used to describe social situations, it can have health consequences, too. For instance, a study published in Motivation and Emotion explains that it can lead to loss of sleep and anxiety.
But when you’re talking about crypto FOMO, the expression has a specific meaning. In particular, the fear of missing out is all about trading crypto. In other words, the phrase describes an emotional reaction that can quickly overshadow rational decision-making when it comes to buying, holding or selling cryptocurrency.
Basically, crypto FOMO is the fear that you’re somehow missing out on big value somewhere in the crypto universe. FOMO is most pronounced when a particular currency sees huge gains. In cases when a crypto increases rapidly in value, it can drive people to buy a currency at less than optimal timing.
The same is true of dramatic drops in value. In this case, you worry that if you don’t snatch up a currency while it’s down, you’ll miss out on a chance to cash out when it recovers. For instance, Bitcoin short positions hit record lows and people are panicking.
Fear of Missing Out Hurts Crypto Investors
FOMO is a huge obstacle to smart crypto trading. This is because these decisions are irrational because they’re based on emotions rather than actual analysis.
For example, the fear of missing out on a cryptocurrency that could someday make people tons of money could lead you to make unwise decisions to buy when you shouldn’t buy, or sell when you should HODL.
Similarly, fear of missing out can sometimes drive people to hastily dump a bunch of their holdings to snatch up another currency that looks like it might see a big jump in value. This can lead you to impulsively sell an otherwise strong currency only to replace it with a weaker, more volatile one. Either way, you’re making decisions based on fear, not logic.
To avoid making bad decisions because of FOMO, always prioritize actual data, rather than a ‘feeling’. Formulate a solid strategy, then keep a cool head and stick to it. When you feel your emotions start to kick in, don’t panic. Don’t feel like you’re going to miss out if you don’t act on something right away.
And when in doubt, return to the data. This will help you steer clear of the FOMO trap and maintain a strong approach to crypto trading.
Almost Everyone Had FOMO in 2017
When Bitcoin saw meteoric growth in 2017, crypto FOMO hit its peak. Overall, the currency’s value skyrocketed from around $900 all the way to nearly $20,000.
At its height, Bitcoin made headlines around the world. Media coverage sparked what was essentially a global case of fear of missing out. People who previously had no interest in crypto suddenly mourned that they hadn’t purchased Bitcoin before it took off.
At the same time, many folks already in the crypto game also experienced FOMO. They got caught up in the hype and dumped other currencies in order to pour all their money into Bitcoin. They bought Bitcoin when it was at its most expensive.
Crypto FOMO tends to be most pronounced—and hardest to resist—in moments of extreme value fluctuations.
Watch Out for FOMO
The next time you see a sharp change in a cryptocurrency’s value, take a second. Don’t make impulsive decisions based on the fear that you might miss out. Stick to a strategy and do your own research. Don’t rely on what other people, including what ‘experts’, tell you.
And rest assured: You’re far from the only person in the crypto universe who struggles with it. It’s so common that there is a unique crypto term for it: FUD stands for fear, uncertainty and doubt. More specifically, crypto FUD has to do with spreading disinformation to get people to subtly manipulate the crypto market.
Just like with FOMO, FUD is an emotional reaction. To be a good crypto trader, you need to check yourself. Don’t let FUD get to you; keep an eye out for FOMO. And whatever you do, try to make rational decisions, trading or otherwise.
