FOMO is not a technical term exclusively associated with the cryptocurrency ecosystem, it is an ancient phenomenon and an inevitable part of all humans. FOMO is the acronym for “fear of missing out”. The term generally indicates the feeling of anxiety arises when others are having a great time. FOMO is a term that can easily merged into the cryptocurrency realm. FOMO in the cryptocurrency landscape is the result of irrational and speculative decisions. The studies suggest that FOMO is more common in individuals aged between 18 to 35. Let us navigate to a detailed explanation of FOMOs and how to prevent them effectively.
What is Crypto FOMO (Fear of Missing Out)?
Crypto FOMO implies the fear of missing out on the cryptocurrency market and investment. This is an occasion where traders and crypto enthusiasts feel anxious about potentially losing a profitable investment opportunity by not involving a particular cryptocurrency trading when its price is leaping up. This phenomenon or anxiety can lead to impulsive and excessive purchases of cryptocurrencies without proper research and market study.
FOMO is a psychological phenomenon that can incite people to make irrational and immature investment decisions regarding their trading and investment planning. It can lead to the purchase of crypto assets at non-optimal prices, which can ultimately damage and anxiety one’s personal and investment journey. The available reports show that a large number of investors experienced FOMO in 2020 and 2021 when the prices of various crypto coins were soaring.
This fear of missing out will intensify the individual’s agitation of being excluded from the market. Investors can prevent FOMO and adopt methods to eliminate this feeling. In the crypto arena, decisions driven by emotional reactions will not help investors, this will only increase the chance of financial loss.
How to identify and understand FOMO?
Identifying and understanding FOMO is the first step, this will help investors and traders to manage a well-disciplined cryptocurrency journey. Individuals being able to recognize the early signs of FOMO can be effective. Here are some habits that indicate when investors are FOMO-driven.
- The urge and need to purchase a particular cryptocurrency upon hearing it has surged its value and gained a significant percentage.
- An uncontrollable desire to invest in a crypto asset just because that particular asset has recently become popular.
- Always thinking about how much profit could be achieved if a trade is initiated and executed.
- Too much obsession with social media news and crypto trends occurs on social media platforms.
These are the common indicators of FOMO and the potential behaviors of individuals who show fear of missing out. FOMO can happen to anyone if you feel any of these, then you might be experiencing FOMO, avoiding adventurous trading and emotionally driven decisions would be ideal at that time.
Crypto FOMO as a psychological phenomenon
FOMO is a revelation of human psychology, the fear of being excluded from the market while others reap profits. This fear of exclusion will drive traders to make impulsive investment decisions. The intensity of FOMO will increase once the cryptocurrency trades at a bullish trend. As per human psychology, this fear of missing out can impact the investor’s trading activities and they are inclined to make impulsive and rash decisions. Engagement in the crypto landscape is not an exception, traders will be forced to make irrational decisions that are completely emotionally driven once they face crypto FOMO.
Social media have a significant impact on human psychology, the impact it has on our decision-making ability cannot be neglected. Crypto FOMO can be incited and fueled by social media platforms. Investors will become forced to follow social media trends without having proper market research and analysis. Fear is a primal emotion that drives human beings forward and backward at the same time. Fear of financial loss is another emotion that can induce crypto FOMO. The fear of losing profits will force the investors to make unreasonable decisions. Greed can be considered as another basic emotion that drives investors into FOMO. greed can never be a good sign in any arena, greed will drive traders to make impulsive and emotionally driven decisions.
How to avoid Crypto FOMO?
Eradicating crypto FOMO from your trading strategy is a major step to moving forward. We can implement so many methods to combat FOMO and ensure long-term and goal-oriented trading. Let us look at how you can avoid FOMO from your crypto space.
- Conduct proper research: Conducting comprehensive research will give you an upper hand and enable you to overcome FOMO. You need to rely on credible media outlets to conduct your research. This research will enable you to make rational and thoughtful decisions.
- Focus on your goals, not quickly making money: Trading strategy should consist of long-term goals and short-term goals, FOMO will not deliver you long-term profits. Stick to your plans whether it is long-term or short-term, and try not to consider FOMO in your trading activities.
- Conduct tactical analysis: Tactical analysis should also be conducted along with market research. Investors can use indicators like RSI(Relative Strength Index) to check whether an asset is overbought. MACD (Moving Average Convergence Divergence) can help you analyze the potential trend reversals.
- Learn from the previous mistakes: Learning from your mistakes is always the best way to evolve and eliminate things from your life. The impulsive decisions you made when you felt fear of missing out should be your teacher.
Combating FOMO is not as hard as it seems, the best way to eliminate it from your trading is to have a concrete trading strategy and stick to it. The ideal way to deal with FOMO is to become aware and educated about the markets. You need to make sure that your strategy consists of entry points, exit points, take profit, and stop loss levels.
The Bottom Line
FOMO can be seen in every aspect of human life, but in modern days, this concept is heavily linked and associated with cryptocurrency investing and the stock market. FOMO is a basic human instinct that is more than capable enough to drive anyone to bad decision-making. Trading psychology can heavily impact your trading activities, it shouldn’t be aligned with your decision-making abilities. FOMO-driven decisions should not have a place in your investment journey. The cryptocurrency journey needs to be all about patience and sticking to your plan no matter what the temporary market fluctuations and trends are.
