FUD and FOMO

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  • Published At: 05.02.19 03:11
  • Last Updated At: 17.09.19 13:54
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FUD means “Fear, Uncertainty, and Doubt” and FOMO refers to the “Fear of Missing Out”. These terms are used to describe the fear that many investors have when trading cryptocurrencies. Neither FUD or FOMO are your friends, you want to avoid this kind of thinking. You should be aiming to think rationally and from a realistic perspective.

The mainstream media outlets and social networks often spread FUD, which can cause an asset price to drop based on negative or misleading information. Many times the bad news are not backed by realistic facts. It can be a statement or opinion from someone with influence and it can affect the market when people believe it. The masses control the market, so if they are afraid, the fear will be reflected in the price.

FUD example:

“Bitcoin will eventually blow up; It’s a fraud, If you're stupid enough to buy it, you'll pay the price for it one day"

-       J.P. Morgan Chase Chairman and CEO Jamie Dimon

After that, the price falls and people have fear and so on, until something curious happens:

Source: news.bitcoin.com

So the guy tells you Bitcoin is a scam to trigger a price drop since he is a public figure and then he quietly buys the dip. As you can see, big companies can use FUD as an instrument for price manipulation.

FOMO is something more personal in my opinion. It refers to the fear of missing out profits that other people are gaining. This causes people to buy at the top and then lose a huge amount of money when the price falls. It may drive u into buying a coin but surely, you will not be able take profits in the end. Social media and mainstream outlets can also spread FOMO.

FOMO example:

We just have to see the past. In late 2017 when Bitcoin was at the $17,000 levels people where still buying. But then came the inverted swaps and the futures from Bitmex and suddenly people had the ability to short BTC and as a result the price dropped. Many investors lost their money.

I think the best way to avoid this kind of thinking is by looking at things with logic, common sense and a realistic perspective. If someone makes a statement or gives, an opinion doesn’t mean It’s true. This applies to all CEO’s as well, they are human beings. Just because someone or a corporate entity has a “good”, reputation does not mean that what they say is absolute.

 

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