FOMO, or "fear of missing out," is a real phenomenon that is becoming increasingly common and can cause significant stress or anxiety. It can affect just about anyone, but some people are at greater risk. This article seeks to address FOMO as it relates to bitcoin traders in the crypto sphere.
Briefly, we would be addressing what you should know about FOMO, its pros and cons, and how to manage FOMO to keep it from negatively affecting you.
What Is FOMO?
The fear of missing out generally refers to the feeling or perception that others are having more fun, living better lives, or experiencing better things than you are. It is the feeling that you are missing out on something fundamentally important that others are experiencing right now.
In the crypto space, FOMO refers to the feeling of fear and anxiety that you experience when you think you might be missing out on a potentially lucrative investment or trading opportunity. Good examples are a sale when a price suddenly rises or a bulk purchase of cryptocurrencies when a price is low. It tends to affect sound decision making and is usually exacerbated by social media sites that more or less contain many unsolicited opinions from others who are not professionals in the field.
What are the Pros & Cons? The Consequences of FOMO
Let’s take as an example Bitcoin (BTC), the world’s first and biggest cryptocurrency. Experts say that Bitcoin has a limited supply of 21 million BTC. However, as of 2021, around 18 million BTC have already been mined, and the rest are planned to be mined until 2140. People that invest in cryptocurrencies have access to this information, and they are more inclined to buy Bitcoins because of the FOMO from its scarcity. The consequences of FOMO may be crucial, but there is also a silver lining to this phenomenon.
Pros
FOMO can offer some good opportunities that may be of a trader’s interest. The main advantages are:
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Favorable buying and selling opportunities;
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FOMO can encourage investment in new coins;
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It can be a good guideline for traders;
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It can be a good motivation to indulge in digital currencies, which is the future of money.
Cons
Speculated FOMO also has serious disadvantages. The key disadvantages are:
- FOMO can lead to a total loss;
- It can lead to unreasonable trading;
- It can lead to unsound decision making.
- The great fear and trade it triggers can strongly impact cryptocurrency prices, especially when it occurs in large quantities with numerous traders at the same time.
How to overcome FOMO?
The feeling may drive individual investors, or the market participants as a whole, to make investment decisions based upon emotion rather than logic and reasoning. This can result in a big bubble in the asset, incurring greater risks of financial losses.
Getting rid of it isn’t easy. To deal with it, do your own research in the cryptocurrencies before making investment decisions, create a set of rules for trading, or set limits on the allowable losses and profits.
The digital currency world is prone to manipulations. One way it happens is by artificially pumping the price and dumping or selling the cryptocurrency. When the prices fall, those who fear missing out on the rise end up making losses.
FOMO is real. Before making any choice, be sure that it is not made out of the fear or anxiety of missing out. Focus on making your own research if you really care about Bitcoin investment, and not unsollicited opinions from trends on social media.
FOMO is real. Before making any choice, be sure that it is not made out of the fear or anxiety of missing out. Focus on making your own research if you really care about Bitcoin investment, and not unsollicited opinions from trends on social media.