FOMO

FOMO is the abbreviation of Fear Of Missing Out, which in Chinese can be translated as phobia of missing out or phobia of missing out. This is a psychological phenomenon that describes the anxiety or regret a person may feel when they believe others have had a better or more valuable experience than they did. FOMO is often associated with the use of social media, because social media allows people to learn about other people's lives, activities, experiences, or decisions anytime and anywhere, resulting in a mentality of comparing or competing with others, and a feeling of being unsatisfied or unfulfilled with their own lives. . FOMO can affect various aspects of life, such as social interactions, career choices, or personal hobbies. In this article, we will focus on how FOMO relates to crypto trading and how it affects the crypto market.

FOMO in crypto trading occurs when a trader makes an irrational decision to buy or sell a crypto asset based on certain information received without properly verifying its source and/or accuracy. FOMO in cryptocurrencies leads people to buy assets at the highest prices and even sell them at the lowest prices, rather than the other way around, which is better advice.

Why Do Investors Have FOMO?

FOMO can be triggered by a variety of factors, such as:

Media Hype

When a crypto asset receives a lot of positive attention from the media or is endorsed by influential figures such as celebrities, politicians, or experts, it creates a sense of urgency and excitement among potential buyers who want to jump on the bandwagon and benefit from the expected price increase. .

Social Pressure

When a crypto asset becomes popular among peers, friends, family, or in online communities, it creates a sense of peer pressure and social acceptance among potential buyers who want to fit in and avoid being ostracized or ridiculed.

Scarcity

When a cryptoasset has a limited supply or availability, such as Bitcoin’s 21 million cap or a hard cap for initial coin offerings (ICOs), it can create a sense of scarcity and exclusivity among potential buyers who want to be the first to get a share Run out or become too expensive.

Greedy

When crypto asset prices rise or fall rapidly, it can create feelings of greed and fear among potential buyers or sellers who want to maximize profits or minimize losses through quick and impulsive actions.

How Will FOMO Affect the Cryptocurrency Market?

FOMO may have the following effects on the crypto market:

• Price Volatility: FOMO can cause significant price swings in the crypto market as traders buy and sell large amounts of crypto assets in a short period of time based on emotion rather than logic. This creates unsustainable and unpredictable bubbles or crashes.

• Market Manipulation: FOMO can be exploited by malicious actors who spread false or misleading information about crypto-assets to create artificial demand or supply and manipulate their prices for personal gain. This can harm unsuspecting traders who fall victim to these schemes and suffer losses.

• Market Innovation: FOMO can also spur market innovation and growth as traders seek new ways to access and trade cryptoassets that offer better returns or opportunities. This can foster creativity and competition among crypto projects, platforms, and technologies designed to meet market needs and preferences.

All in all, FOMO is a common phenomenon in the crypto market that has both positive and negative effects on the market and traders. FOMO can drive prices up or down, create opportunity or risk, and encourage innovation or manipulation. Therefore, traders should always remain cautious and rational when making trading decisions to avoid being affected by FOMO.

How Should Traders Deal with FOMO?

1. Enhance your financial knowledge and literacy, understand the basic principles, laws and risks of the cryptocurrency market, do your own research and judgment, and do not blindly follow the trend or panic.

2. Develop your own investment goals and strategies, choose appropriate cryptocurrency projects or products based on your own risk appetite, time perspective and money management, without being greedy or fearful.

3. Focus on the long-term trends and values of the cryptocurrency market, rather than short-term fluctuations and prices, and recognize that cryptocurrency is an innovative and transformative technology and asset class with broad prospects and potential.