Dear readers! The fear of being left behind is naturally connected with every human being. Sometimes your brain also gets some thoughts, like:
My friend is investing in this business and will make a profit of millions. What if I get deprived of this opportunity? What if my friend became more financially strong by investing in this business? If I don’t take any action right now, I will stay where I am today.
Readers! Such a fear is called FOMO, which compels people to make decisions( whether they are wrong or right) without proper thinking or someone’s guidance.
This fear is mostly seen in the crypto landscape, where when the value of any cryptocurrency starts rising, this FOMO starts to disturb them mentally. They are scared of missing out on an opportunity to make a profit by investing in this coin.
Let’s now discuss this thing in detail. In this blog, we will cover some topics, such as;
- What is FOMO in crypto markets?
- What are the causes of FOMO in the crypto market?
- Effective tips to overcome this FOMO.
Ok! Let’s start………
What Is FOMO in Crypto Markets?
FOMO stands for Fear of Missing Out. In terms of cryptocurrency, FOMO is a fear that casts pressure on investors to buy crypto assets( Bitcoin, Ethereum, and others) quickly without someone’s guidance or proper knowledge.
When the price of any digital coin rises, these investors get scared that they might miss out on an opportunity to make a huge profit. It usually leads to impulsive and emotional decisions, especially when the crypto market is going up and down very quickly.
Now, such impulsive decisions are not always profitable. Sometimes, investors buy assets at a higher price. They think this price will rise further, and they will make a desired profit by selling them. However, this price suddenly drops, and they face financial losses.
What Are the Causes of Crypto FOMO?
Once you have clearly understood what is FOMO in crypto markets, it’s time to reveal some of its reasons. Basically, multiple reasons develop this fear in crypto investors, we are going to reveal 4 major of them.
1. Social Media Influence
Social media groups, like Facebook, Twitter, and others, are one of the most significant sources of crypto hypes. On these platforms, investors or traders often share their success stories and amplify hype around some cryptocurrencies. This hype makes other investors feel that they are missing out on an investment opportunity. In this situation, they rush to invest without proper knowledge.
2. Quick Gains
The promises of quick profits often attract crypto investors on a large scale. They get manipulated by seeing others making a huge profit in a very short time. Due to this, they jump into crypto investment without analyzing the risks and doing proper market research, leading to financial losses.
3. Success Stories of Early Investors
One of the biggest reasons for crypto FOMO is that many new investors are impressed by the success stories of early investors. They believe that the early-mover advantage always leads to positive outcomes. However, it is a misconception, as not all cryptocurrencies deliver the expected returns to investors. Although the early investment is rewarding, it can also carry several downsides and financial losses.
4. Market Volatility
There is no other market in the world whose volatility is like that of the crypto market. Dear investors! The prices of cryptocurrencies rise as well as fall suddenly and unexpectedly. The sudden rise in values creates a fear of missing any profitable opportunity among investors and lets them make impulsive decisions( discussed in the previous section).
How to Deal With Crypto FOMO: Effective Tips
This section is vital for all investors, as we are going to describe effective tips that can help you cope with this crypto FOMO. Read the 5 tips discussed below.
Tip 1: Build an Investment Plan
A pre-planned and well-thought-out investment plan is one of the best ways to cope with FOMO. Dear investors! Let’s have a very simple question:
If you already plan everything, like how and when to invest according to your budget, will these market hypes emotionally disturb you or change your mind? We don’t think so……
So, if you ever think of making a profit through crypto investment, then first build a solid plan. Here’s how you can do it;
- Define and understand what your investment goals are.
- Diversify such a crypto portfolio that helps you earn rewards with manageable risks.
- You should always choose a user-friendly, affordable, as well as secure crypto exchange.
- Curate a risk management plan that will let you reduce major financial losses and save your crypto assets.
Tip 2: Do Your Own Research(DYOR)
The biggest reason behind the crypto FOMO is that most people blindly believe in social media hypes and others’ poor advice. Making impulsive decisions by listening to others without doing your own research always leads to regret.
Do Your Own Research is a specific rule that protects investors( especially newbies) from FOMO-like fear. It enables them to make decisions based on real market trends rather than the spontaneous overflow of emotions. Below are some lines to DYOR.
- Identify and verify the common crypto scam.
- Always follow reputable and up-to-date news.
- Study the whitepapers of cryptocurrencies to analyze their purpose.
- Never forget to check the trading volume of tokens and coins before making a decision.
Tip 3: Focus on The Long-Term
Some people don’t realize that the ups and downs are a part of the crypto market. We have seen many investors who made wrong decisions at the time of the market’s downturns and faced losses.
There are many examples before us where people bought cryptocurrencies at very high prices. However, as soon as their market values started to drop, they sold them at lower prices to avoid further losses. They did their own loss without thinking: As the prices had fallen, they could also rise again.
Such impulsive decisions always lead to regret…….
So, crypto lovers! It is one of the best rules of crypto success: Stay calm & prefer the long-term investments over short-term ones.
Tip 4: Learn From Previous Mistakes
You would have even heard that a person doesn’t get a chance to learn further without committing mistakes. Let’s suppose you fell victim to FOMO and committed a big mistake( like you invested a large amount in crypto without proper research). Now, you don’t lose hope.
Just reflect on your mistake and take a lesson from it for the future. As the proverb says, “Once bitten, twice shy”. It means that when a person suffers from something once, they become more cautious in the future.
So, you also have to follow this proverb. Don’t let your previous mistakes lower your confidence or passion for crypto. Instead, use them as a powerful weapon to defeat this FOMO and start again.
Tip 5: Build Emotional Resilience
Investing in cryptocurrencies demands a strong emotional resilience, especially during high volatility(market downturns). Emotional resilience means how you control your emotions and manage stress or anxiety. Below, we have listed some effective tips on how to build emotional resilience and get rid of the Fear of Missing Out(FOMO).
- Engage in activities that provide you with full mental satisfaction.
- Don’t see your crypto chart again and again to reduce your tension.
- Never blindly follow others. Do your own research before investing.
- If the crypto market drops for a while, don’t rush and avoid selling your currencies too quickly.
- Disconnect yourself from the crypto market for a short time and engage yourself in mind-relaxing activities.
What Is FOMO in Crypto Markets: Let’s Conclude
FOMO, or Fear of Missing out, refers to a psychological pressure that urges investors to make wrong decisions about investments. Due to this fear, many investors jump into crypto investments without proper research and guidance, and face unexpected financial losses.
To cover everything in detail about such a fear, we have curated this article. We started with what is FOMO in crypto markets and explored its comprehensive overview. After this overview, we came across two main sections:
- Causes of Crypto FOMO: We discussed 4 major reasons.
- How to avoid crypto FOMO: We shared 5 effective tips with crypto investors.
