Online forum members often warn nervous investors not to give in to “FUD” when investing in crypto. But what is FUD, and why does it plague crypto markets? Keep reading to learn more about this term and how it influences investment decisions!
What Is FUD?
“FUD” stands for “fear, uncertainty, and doubt”. It’s a sales and marketing term that has made its way into crypto slang to describe the intentional spread of negative rumors and bad news about coin prices, NFT projects, or other crypto assets.
FUD can be based on truth or completely false statements. What makes it FUD is its use for market manipulation. FUD creates negative perceptions of its targets, discouraging innocent investors from buying them or joining their communities. Note that this term is also used by crypto enthusiasts to describe skepticism towards cryptocurrency coins.
Watch Out For FUD On Public Forums
Because crypto investing is still fairly new for many investors and strongly influenced by emotions, the spread of misinformation and negative headlines can cause an immediate plunge in prices. FUD can push cryptocurrency newbies into dumping a coin that has gone down slightly in value, even if it has otherwise been historically profitable or stable.
While forums offer useful information and advice for cryptocurrency traders, users should be careful about what news they read there. It’s possible that some information is FUD deployed to tank a coin’s value or sink a project for someone’s personal gain.
What Is A FUDster?
FUDsters are people who publicly oppose cryptocurrency. Prominent FUDsters include Warren Buffet, Nobel-winning economist Joseph Stiglitz, and Tesla Motors CEO Elon Musk, who swings between loving and hating cryptocurrency on Twitter.
A FUDster’s dislike of crypto trading may stem from various reasons. Note that many crypto investors consider these as debunked or in the process of being solved to create stable, more profitable financial markets:
- Cryptocurrency trading is a Ponzi scheme.
- Crypto mining contributes to global warming and damages the environment.
- Cryptocurrencies are essentially worthless coins.
- Crypto trading is too volatile for gradual mainstream investment.
- Crypto wallets and coins facilitate criminal activity like money laundering.
- Governments will crack down on the entire cryptocurrency market, significantly reducing its profitability.
The crypto community attributes these FUDster sentiments to a lack of understanding about how the market works, concerns about criminal activity, or suspicion of market manipulation.
Becoming a successful crypto trader requires sharp insight into what’s real and what’s just FUD. If you see negative news, don’t rush into selling just to cut off potential losses. See if experienced traders will give clarifications or debunk rumors – this caution may save you from making costly mistakes.