Bitcoin and cryptocurrencies: #FOMO and #FUD the 7 most feared letters
The phenomena of FOMO and FUD shake the market of new investors. What do these words mean and why is it dangerous behavior?
According to a study by the French consulting firm Chappuis Halder & Cie, more than 52.4 million people globally invest in cryptocurrencies.
What do the acronyms FOMO and FUD mean?
FOMO, the fear of missing out.
On one hand, FOMO (in Spanish, the fear of missing out) is a psychological effect that arises from the fear of missing out on social experiences that others are perceived to be having.
This phenomenon, on the other hand, goes hand in hand with the acronym FUD which stands for "fear, uncertainty, and doubt." This is a second phenomenon that occurs when investors buy an expensive asset - as a consequence of FOMO - and later, the price of the asset falls.
Why are #FOMO and #FUD dangerous?
So, both phenomena have clear consequences in trading: one of the main ones is the "compulsive" desire to stay connected on social media to not miss any news and know what is happening online.
According to experts, everyone could suffer from FOMO but the most important thing is to be able to identify it to avoid making the wrong investment. For this reason, it is recommended to analyze an asset before investing to avoid impulsive decisions.