FOMO, FUD and crypto: what’s the connection?

The abbreviations FOMO ( “fear of missing out” ) and FUD ( “fear, uncertainty and doubt” ) are heard increasingly often in the crypto ecosystem because they influence how investors behave when faced with fluctuations in the market.We’ve already looked at FOMO in another article. Coined by Patrick McGinnis back in 2004, the term wasn’t specifically meant as a reference to digital currency, but it’s become a very relevant concept in the sector. According to the Cambridge dictionary, FOMO refers to “a worried feeling that you may miss exciting events that other people are going to, especially caused by things you see on social media”.

In the crypto world, FOMO can refer to both the desire to invest in cryptocurrency in general in order to “not feel left out” and to the enthusiasm generated around a specific currency at a particular time. Some experts say that FOMO is common in the crypto world because “every second post related to potential future crypto price performance seems to be accompanied by projections that the price will go “to the moon”, often followed by multiple dollar signs and rocket emojis.”

FUD: how to avoid panic

While FOMO is experienced on a personal, individual level, FUD is a broader, generalized reaction to uncertainty in the crypto market during a specific time. But the question that every investor needs to ask at such a moment is whether the “panic” is justified or if it’s been sown intentionally by interested parties.

In the crypto space, where information circulates 24 hours a day every day, FUD can be caused in several ways. However, it’s important to bear in mind that the crypto world is more volatile than traditional markets and the sometimes sudden price variations can be intimidating for newcomers.

In any case, those who study emotional investment cycles note that in general, irrational or less-informed investors buy high in the FOMO period and sell cheap during a period of FUD, while more experienced investors design their own strategy and avoid being influenced by the latest external opinions.