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FOMO is a common terminology thrown around in social media. It refers to an urgent emotion that people experience when they feel that an opportunity is about to pass them.
However, that term is not just confined to social media. It is now part of the wide crypto glossary. Also, this is a term that beginner investors have to be familiar with because it will help them manage their emotions once they start investing in crypto assets.
This blog post will discuss all about FOMO and how it impacts your financial decisions.
Fear of Missing Out (FOMO) Definition
Fear of missing out relates to the heightened anxiety that investors feel. Big developments in the crypto market make them feel this way. Social media amplifies this through the posts that users make about how a certain cryptocurrency helped them earn three times their normal income or how they were able to buy a new house and car.
FOMO happens because investors are afraid of not being able to make huge profits in the various cryptocurrency projects.
As a result, FOMO can lead to the fear of missing out causes crypto traders to decide irrationally. They hastily buy or sell at a very high or low price.
Origins of the Term
A research paper that Dr. Dan Herman wrote in 2000 is the first recorded description of this concept. The title of Dr. Herman’s paper was “The Journal of Brand Management”. But, it was not until 2004 when Patrick McGinnis coined the now-popular acronym for fear, uncertainty, and doubt in his published editorial for The Harbus magazine in 2004.
Crypto FOMO in Real Life
In 2021, Dogecoin experienced volatile market movements. The tweet that Elon Musk posted sent people into a frenzy and invested their money in Dogecoin. The crypto memecoin’s price plummets or rises depending on the public’s interpretation of Musk’s words.
To illustrate, Dogecoin’s value shot up after Musk’s guesting in the Saturday Night Live show. But, it dropped by 30% when Musk called Dogecoin as “a hustle” during his SNL interview.
This is one example of FOMO-driven crypto trading.
What Causes Fear of Missing Out?
Making a Big Profit
Who wouldn’t be enticed by earning a lot through cryptocurrency? You can read a lot of stories about people who tripled their gains because they invested early. Now, many investors are on the prowl to make initial investments in promising start-ups because they believe that its value will rise steadily through the years.
Preventing Huge Losses
When TerraUSD (UST) crashed on May 11, 2022, their investors experienced FOMO because they didn’t want their assets to crash. Aside from the desire to earn huge, FOMO also pushes crypto enthusiasts to be wary of huge losses.
The role of social media is invaluable. It helps people stay updated on new cryptocurrency projects and significant news about the large market. On the contrary, it overwhelms people and impairs their judgment. There are various news outlets that report about cryptocurrency. They all have different outlooks and opinions. This causes confusion among people and makes them too emotional in their investment decisions.
Early Bird Catches the First Worm
This popular quote has a profound effect on crypto enthusiasts. They believe that being one of the early investors will ultimately lead to success similar to the other crypto millionaires. For example, Kane Ellis and Kristoffer Koch.
Nevertheless, the main downside of this belief is that not all cryptocurrencies will not make it in the long term.
Shiny New Market
A lot of people are attracted to the novelty of the cryptocurrency space. Many newbies participate in risky investments despite their limited knowledge. They join mainly because of the fear of missing out.
Don’t Let Crypto FOMO Get to You
In our technology-driven world, the amount of data we try to comprehend on a daily basis can be exhausting. Here are some ways on how you can protect yourself from being a FOMO victim:
Do Your Own Research (DYOR)
Another useful acronym that will help you be more alert. DYOR means to do your own research. When you come across what seems to be a potential crypto project, research it right away.
Check their whitepaper, read about their market capitalization, total supply, and how many coins in circulation they plan to put out. You need to understand concepts such as circulating supply and cryptocurrencies’ market cap.
Narrow Down Your Info Sources
One of the ways that an investor fails is if he listens to everyone all the time. Choose who you can trust and stick to those individuals or groups. Listening to only credible coaches will provide you more clarity and make your trading more strategic.
Investment is Not Always About Money
When you choose to become a crypto investor, make sure you have a goal. Otherwise, all your money and effort will just go to waste. Make a list of your objectives and goals. Most importantly, make sure you commit to what you listed down. It will help you stay grounded in spite of the market’s volatility.
Focus on Your Portfolio
Part of your factors for success is having a well-planned portfolio. Choose your assets wisely, deposit money carefully and don’t obsess over profits. Investments will mature in the right time and you will reap the rewards as long as you are patient and committed. Don’t make investment decisions based on the feeling of anxiety.
Fear of missing out is deadly. It can make you react in ways you don’t even expect. Anxiety can make people join the bandwagon. Nonetheless, crypto hypes can be premature and not have firm guarantees of long-term feasibility.
Learn to control your fear, excitement, and panic. Slow and steady is the best way to approach crypto investments. Beware of pump and dump schemes or other crypto scams through initial coin offerings.
FOMO is not good for you.