When a person irrationally decides to trade or invest in a crypto asset based on information they have received without adequately verifying its source or authenticity, this is referred to as FOMO in the crypto market. In the case of cryptocurrencies, FOMO can cause people to buy crypto assets at their highest prices or sell at their lowest instead of behaving prudently.
Crypto FOMO can occasionally have negative effects that are more severe and far-reaching than simply the loss of invested money; these effects can include the breakdown of personal relationships, anxiety, and despair. In this article, we define FOMO and discuss how not to lose control when trading cryptocurrencies.
What is FOMO?
The term "Fear Of Missing Out" (FOMO) describes the worry you could have if you feel you are slow to make trading decisions and are concerned that others in the crypto community are likely to make financial gains, but you will be left behind.
For example, if you watch the value of a coin you do not own go up, you may experience FOMO. Some people are so shaken by the upward trend of the green line that they rush to buy the coin that appears to be increasing in value.
Trading cryptocurrencies can be an exercise in speculation, and FOMO can be an important factor in traders' decisions about what to buy, sell, or hold. FOMO can even lead some people to remove their assets from a market altogether.
While missing a lucrative trading opportunity is often highlighted when discussing FOMO, the opposite is also true.
With trades happening at a rapid pace, there could be many reasons why a price has suddenly dropped. For example, many people could be selling too much just because there are rumors of government controls or unfavorable markets.
When coin prices hit a record high, traders may want to profit while the going is good, inspiring others to do the same. However, a wait-and-see approach could result in you selling when the price starts to fall again, denying you the substantial profits associated with a price high.
Advantages & Disadvantages of FOMO
FOMO has advantages and disadvantages; let’s check this out below:
Advantages
Keeping up to date with the news: FOMO can be helpful when it comes to keeping up with the latest market trends or staying informed about current affairs.
Motivates you to take action: Another benefit of FOMO is that it can motivate you to take action. When you are anxious, you are more inclined to take action so as not to miss a good opportunity. This can be useful in situations where you need to take action to achieve a goal.
Source of motivation: FOMO can be a source of inspiration for some people. If you are worried about missing a good opportunity, you may be more motivated to make an extra effort.
Disadvantages
Tension and anxiety: One of the biggest drawbacks of FOMO is that it can cause worry and anxiety. Your mental health can suffer if you are constantly worried about missing out on something.
Impulsive decisions: Another disadvantage is that FOMO can increase impulsive decision-making among some crypto users. When you fear missing out on an opportunity, you are more inclined to make rash judgments without carefully weighing your options. This can have detrimental effects on the cryptocurrency industry as well as many facets of daily life, including work, relationships, and education.
Prevents you from living in the moment: One of the biggest drawbacks of FOMO is that it can make it difficult to enjoy the present. You may not be able to enjoy the present if you are constantly worrying about what you are missing. This can cause you to be dissatisfied with your life and make it difficult to appreciate the positive moments.
Signs of FOMO to Watch For
Knowing some of the causes of FOMO is a good start, but it is equally important to recognize the symptoms. For example, the following actions could be a sign that FOMO may drive you or another investor:
The desire to buy cryptocurrency increases significantly as soon as you hear about it.
The desire to trade or invest just because of a digital asset has become more popular lately.
They constantly think about the possible profit from a trade.
The social media obsession with crypto trading and hot topics.
How to Deal with FOMO
Below are suggestions on how to counter the feeling of FOMO if you notice it starting to creep into your day-to-day life.
Take a break from social media
Try not having internet access for a day, a week, or even longer. There are numerous examples of people who cut themselves off and then discover the wonders of the outside world and radically improve their own personal lives.
Use software to beat the FOMO feeling
Apps like RescueTime or Space allow you to check how much time you spend online and set time limits. In addition, Internet blocking software or browser add-ons prevent websites that provide unwanted distractions for people who need more drastic means.
Embrace it
Simply decide to accept the feeling and learn to overcome your fear of missing out. Remind yourself that there will always be new opportunities in the field of cryptocurrencies and blockchain technology.
Related Terms
Now that you know what FOMO is, there are other interesting acronyms that you are likely to see thrown around in the crypto space. Some of the top cryptocurrency space terms include:
FUD
Fear, Uncertainty, and Doubt, or FUD, is often spread on social media platforms. FUD can cause a coin's price to fall based on negative news that circulates on social media rather than on fundamentals or charts. Frequently, the negative news usually isn't supported by evidence or based on fact.
Dump
This refers to when a cryptocurrency is sold in large quantities at once. This can affect a single cryptocurrency, an entire crypto industry, or all cryptocurrencies at once. Normally, the dump leads to a dramatic drop in price, which often causes more investors to sell.
Paper Hands
The slang term "paper hands" refers to cryptocurrency traders who sell their holdings too early because they are extremely risk-averse. The term first became popular on Reddit.
The Bottom Line
People had experienced FOMO in various forms long before cryptocurrencies were created. The possibility of losing the entire investment can be detrimental when trading cryptocurrencies. Investors who are disciplined and follow advice can avoid the risks and negative effects of crypto FOMO.
