Many of us may know what FOMO means when it comes to hanging out with friends or missing events. But what does FOMO mean to the crypto community? Keep reading to find out when crypto enthusiasts use this term!
What Is FOMO?
The term FOMO is an acronym for “fear of missing out”. While this term has been used in regular speech to describe missing out on opportunities, it has special weight in crypto exchanges.
It accurately describes the feeling a crypto trader gets when they see a sudden uptick in the value of certain crypto assets. To rid themselves of the fear that they’re missing out on potentially huge profits, nervous traders will sell off other assets to buy these coins or NFTs.
FOMO also goes the other way – it can also describe the sudden fear that you need to start unloading coins in response to sharp price drops. Time and time again, newbie investors hastily start selling off a coin that is suddenly performing badly. This is FOMO of cutting losses and retaining as much value as you can.
FOMO Needs To Be Tamed For Smart Investing
FOMO is an emotion, and much of crypto trading tends to be done because of emotions – not because of careful study of coin prices and their valuation. This means that FOMO is a massive factor to consider if you plan a swing trade.
The higher the gains go over time, the more powerful that feeling of FOMO can become. This fear of missing rare opportunities can push a beginner investor into making hasty investment decisions, resulting in huge losses.
Experienced traders learn to control that feeling of FOMO and avoid making bad trades just because they see crypto market swings.
FOMO Is One Of The Biggest Reasons Investors Crash And Burn
Because uninformed investors can quickly get carried away by FOMO, it’s important to study the sustainability of a cryptocurrency, cryptogame, or other NFT-related projects. Many online forums warn of the spread of initial buzz in crypto circles that can inflate the value of new releases.
One example would easily be the FOMO many experienced when play-to-earn cryptogames like Cryptoblades emerged. Touted as easy to play, Cryptoblades was seen as a game that allowed even novice players to make decent returns despite the gas fees.
Cryptocurrency newbies excited by a new digital asset spent extra to forge weapons, create characters, and fight enemies. But by mid-2021, players complained of problems withdrawing from cryptowallets and increasing losses from combat. It became difficult to turn a profit, and many chose to abandon the game and cut their losses.
Today Cryptoblades is still running and is working on fixing staking, reward withdrawal, and token burning. But its quick rise burned plenty of players who succumbed to FOMO by getting into the game, only to end up losing money.
If you want to dip your toes into the crypto market, you’ll need to master sudden FOMO to avoid buying into hype for worthless coins. Go through Bitcoin forums to learn why some coins are getting buzz and why some investors feel skeptical about them. You’ll come to a more logical decision and avoid making the wrong choice swayed by FOMO!