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What is FOMO in cryptocurrency

What is FOMO in cryptocurrency?

  • 30 August 2022
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If you are active in the field of cryptocurrency, you must have come across a term called FOMO many times, and if you have just started this activity, you probably still do not know the exact and complete meaning of this key term in the cryptocurrency market. FOMO is considered one of the fear factors in the world of cryptocurrency, which has had significant effects in determining the direction of the cryptocurrency market; Therefore, we suggest that you prioritize finding the answer to the question of what is FOMO in cryptocurrency, as well as the reasons for its occurrence and how to manage it. In this article, you will find all the answers you need about the term FOMO in cryptocurrency.

What is FOMO in cryptocurrency?

FOMO stands for “Fear of Missing out”. Dr. Dan Herman introduced this concept in 2000 in an academic article titled “The Journal of Brand Management”. However, it was four years later that Patrick McGinnis used the acronym FOMO for the first time in an article in Harbus magazine.

This concept refers to the feeling of anxiety that comes from thinking that you have missed an opportunity that others have taken. This feeling of fear and anxiety is a common phenomenon in social media; Because others often show the positive and helpful parts of their lives, which causes you to feel sad or dissatisfied with your experiences in your mind.

Fomo in cryptocurrency and the world of trading and financial markets, in general, refers to the fear that a trader or investor feels when losing a profitable investment opportunity. This feeling is especially true when the value of a particular asset has increased dramatically in a relatively short period. Fomo in trading can lead a person or even the entire market participants to make emotional decisions instead of using logic. Such decisions are dangerous for undisciplined investors, especially those with little capital; Because they often cause transactions in which the asset value is considered higher than the actual value, and as a result, the possibility of capital loss increases.

What are the causes of FOMO in cryptocurrency?

Typically, people experience FOMO when they feel they are missing out; Whether it’s an event, product, or business opportunity.

The fear of losing cryptocurrency occurs when prices begin to rise. Traders and investors feel that they are missing out on a huge opportunity to make profits. Fomo in cryptocurrency can be so strong that it leads you to make a hasty decision without doing proper research, including technical analysis and fundamental analysis of the cryptocurrency. The three key factors effective in creating FOMO in cryptocurrency are:

The large profit potential of the cryptocurrency market

Cryptocurrency is an exciting new asset class that offers great potential for capital growth. The fact that people don’t want to miss such an opportunity to make huge profits is one of the main reasons for the existence of FOMO in cryptocurrency.

The high volume of advertisements

The high volume of advertising for the cryptocurrency market is another reason why FOMO is so common in cryptocurrency. Social media, forums, and blogs are all full of information about the latest price changes and investment signals in the cryptocurrency market.

It can be hard to resist the urge to invest when everyone around you is talking about how much they can earn from cryptocurrency; But remember that the mere popularity of an asset is not a good reason to invest. Before buying any cryptocurrency, do a thorough research to make sure it is suitable for investment.

High volatility in the market

The last reason for FOMO in cryptocurrency is low confidence in this market. Digital currencies are still relatively new and their price fluctuates a lot, which means that there is always a risk of the price falling and, on the other hand, people’s desire to profit from this volatile market.

How does Fomo work in the cryptocurrency market?

In the field of digital currencies, FOMO may cause fluctuations in the market. It also shows that the mass adoption and increasing popularity of this field have led to an increase in the price of cryptocurrencies.

Due to the fear of missing out on good investment opportunities, FOMO leads to irrational decision-making; Because you are afraid that you will lose more profit by continuing to increase the price, and ultimately, you will pay for such decisions by losing your capital.

Advantages and disadvantages of FOMO in the cryptocurrency market

Advantages of FOMO in cryptocurrency

FOMO is not as bad as you think and it even has some benefits which include:

  • It forces you to stay up-to-date.
  • It encourages you to act in uncertain situations.
  • It can motivate you.

Disadvantages of FOMO in cryptocurrency

But Fumo’s works do not end here and have some disadvantages, which include:

  • Continued anxiety and worry caused by FOMO will have a destructive effect on your mental health.
  • FOMO can lead to making irrational and hasty decisions.

If you get too caught up in fomo, you stop enjoying and taking advantage of the present.

How to manage FOMO in cryptocurrency?

You may feel that if you don’t invest in a particular asset or project, you’re missing out on potential profits. This feeling often leads to making an irrational decision and ultimately suffering a loss; Therefore, we should try to control the fumo in us. In the following, we will check some tips to prevent the occurrence of FOMO in the trade.

Do a research

Doing your research properly is the most important thing you can do to avoid FOMO. Don’t base your investment decisions on what other people do or say. Do your research and only invest in projects you believe in.

Stick to your predetermined schedule

When you have a plan and stick to it, it will be easier for you to resist the temptation of fomo in cryptocurrency. Determine your investment limits and goals in advance. This helps you make rational decisions instead of emotional ones.

Do not invest more than you can afford

This is a general rule of thumb in investing, and it becomes even more important in the volatile world of digital currencies. Never invest more than you can afford to risk.

Be patient

The cryptocurrency market can be very volatile; Therefore, patience is a vital need. If you enter an investment opportunity only because of the fear of losing, you may end up losing all your capital. Wait for the right opportunity and don’t let FOMO dictate your decisions in the market.

Accept loss as normal

There will always be new opportunities in the world of digital currencies. If you miss an investment opportunity, don’t worry, another opportunity will come. Focus on your long-term goals and don’t let cryptocurrency fomo derail you.

What is FUD?

FUD, a term created by combining the first letters of the three words “Fear, Uncertainty, and Doubt,” refers to the spread of “fear, uncertainty, and doubt,” usually through the media.

FUD may cause the price of digital currencies to decrease, But not based on fundamentals and technicals, but based on the bad news that is spread all over social media. Most of the time, the bad news is not substantiated or substantiated in fact, and instead, after tracking it down, you end up with a silly source; For example, a famous person’s opinion that Bitcoin is a bubble. Fear, uncertainty, and doubt spread throughout the investing community through the media can be called FUD.

What is FOMO in cryptocurrency

FOMO, on the other hand, is a more personal concept and refers to a situation where you fear missing out on an opportunity that others are taking. Paying too much attention to such a feeling, to the point where you base all your investments on it, can cost you your entire fortune.

These terms apply to any situation where fear may become an obstacle, But they are usually used to describe fears that get in the way of a deal. The similarity between these two concepts is that both are factors based on fear and affect the process of transactions and decisions.

There are two tips to combat these economic mistakes, which are:

Take the principles and diagrams seriously

Notice FUD early and react accordingly. If you think the price of the cryptocurrency will fall irrationally, set your stop loss and be ready to buy again when the price drops.

Trust your analytics and statistics

If an asset looks promising and well-supported, trust your strategy and remove emotion from the decision-making process.

FAQ

What is FOMO?

The word FOMO is short for “Fear of Missing out”.

Who are the most affected by FOMO in trading?

Due to their constant presence in cyberspace, teenagers and young people are more exposed to FOMO than other age groups. Social networks make people compare themselves with positive and fake images of others, which increases personal dissatisfaction and, as a result, FOMO in a person.

Final Word

In this article, we tried to fully describe FOMO in cryptocurrency so that you can use it on the way to reaching your financial goals. At the end of the day, you are the only person responsible for every single decision made for your property; Therefore, we suggest you make rational decisions based on your predetermined strategies, away from any emotions, and believe that there is nothing to lose. However, don’t forget that in the volatile cryptocurrency market, the most profitable is the one who is aware of all the news and can make a decision that suits the situation without getting emotional.


Why Bitcoin cloud mining?

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