What is FOMO in Crypto?
FOMO term is being used in crypto extensively especially if you are a newbie in crypto then you may wonder what it means? FOMO stands for Fear Of Missing Out! FOMO in crypto occurs when trader makes irrational decision based on sudden market movements. FOMO leads user to buy crypto currencies like Bitcoin and altcoins when they are almost at the height of current cycle. Similarly, it leads people to sell at the bottom in anticipation of further drop.
When FOMO is generated?
FOMO is usually generated when everybody starts talking about digital currencies as they start moving up. This fear urges the investor to buy digital assets most of the time at their highest prices without understanding the market dynamics.
When bull market arrives, many influencers start talking about their favorite crypto assets specially on Twitter, TikTok and other social media channels. Sometimes new investors don’t understand that these influencers may have years of experience and they entered the market when many assets were at their lowest.
From my personal experience, during 2021 bull cycle, the more price of Bitcoin was moving up, the greater FOMO was increasing in people and they even started investing in Bitcoin at $60,000. When FOMO increases to a larger extent, volatility of an asset becomes inevitable which in last cycle resulted in Bitcoin to collapse to $15000 gradually. There is no denying that other factors do affect crypto market as it is still in its developing phase but FOMO does play a vital role.
FOMO is usually a result of unregulated emotions without prior trading experience. Traders even with years of experience get fomoed and start to feel that if they don’t invest at this certain point, they will miss out on quick big profits.
So, before trading in crypto or any other financial markets, you must be able to recognize and regulate your emotions to avoid losses.
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