FOMO and Cryptocurrency Market
FOMO or fear of missing out is a very common feeling in cryptocurrency markets for two reasons:
• Cryptocurrency prices are very volatile compared to other assets.
• Cryptocurrency market is relatively new and seems like a good opportunity to make big profits.
You may have heard about people who became rich overnight using cryptocurrencies or users who held onto Bitcoin for a long time and are now millionaires. These stories may tempt you to take big risks or engage in irrational trading behaviors just because you want to experience the same thing. We have to tell you that these stories are not wrong. Anything is possible in the world of cryptocurrencies. We have actually seen coins or tokens that have gone up in price tenfold overnight. But remember that this is a double-edged sword. As we mentioned earlier, anything is possible in the world of cryptocurrencies. You may invest your hard-earned money in a new, unknown cryptocurrency and lose it all in a few hours or even a few minutes.
FOMO or fear of missing out can also occur in this market due to a rumor that the price of a coin will rise. These types of rumors make users rush to buy that coin and expect huge profits. But be careful: the price of cryptocurrencies is determined entirely by supply and demand. When the demand for a certain asset increases, its value also increases, and vice versa. This unreasonably high demand leads to a price bubble, and just when the price reaches its highest possible amount, whales enter the market and sell their cryptocurrencies at the highest possible price. Since a large volume of that cryptocurrency enters the markets, the supply increases and the price decreases. This is how you lose as a retail investor while helping the whale gain more profits. Perhaps the best solution in this confusing situation is to maximize your knowledge and make rational expectations. When Bitcoin was created, only a few people could have predicted its price today. Do not forget that this opportunity will not happen every day, but also remember that if you have reasonable expectations, you can make acceptable profits. You just have to study a lot, follow new projects a lot, try to improve your basic analytical skills and avoid wishful expectations.
How to avoid FOMO?
In the previous paragraph, we mentioned some solutions to avoid the fear of missing out or FOMO. Some other solutions that you can use to avoid FOMO and make rational decisions include the following:
• Have a well-tested trading strategy and follow it.
• If your trading strategy proves to be impractical, change it.
• Follow the news from reliable sources.
• Avoid the pressure of social networks.
• Don’t blame yourself for missed opportunities.
• Don’t be greedy.
• Enrich your knowledge.
• Improve your technical and fundamental analysis skills.
Conclusion
As a final point, we would like to say that having a strategy is exactly the enemy of FOMO. Losses are inevitable in the cryptocurrency market, but you can minimize wrong decisions and losses by using a well-tested strategy. We also suggest that you avoid rumors as much as possible. As we mentioned, FOMO is more common in the cryptocurrency market than in other financial markets, but the more you know, the more successful you will definitely be.
