Fear Of Missing Out (FOMO)
Tue, Apr 15FOMO stands for “Fear Of Missing Out.” It is a powerful feeling of anxiety experienced by crypto investors and traders when they anticipate that the value of a digital asset will rise.
Although they haven't made any purchases yet, they are anxious about missing the current lower price, prompting them to enter the trade based solely on that expectation.
Investors worry that they will miss the opportunity to invest in the next big “narrative” that everyone is discussing, or that a significant price increase is imminent, leading them to fear missing out on easy profits.
This anxiety intensifies as they witness price surges while remaining on the sidelines without any holdings.
Jumping into a crypto trade driven by FOMO, or making buy or sell decisions based purely on emotion without considering other factors, significantly increases the risk of financial loss for the investor.
This can occur if the trader buys in just as the momentum is fading, or if they hold onto an asset for too long while other traders sell to secure their profits.
For instance, consider a scenario from Crypto Twitter:
Trader 1: “Elon Musk was pumping up Dogecoin on Twitter this morning. That thing jumped 25% in the first hour! I knew it was still gonna go higher, so I FOMOed in and bought $500 worth. 30 minutes later, a whale dumped his position and the price dropped like a rock. I got rekt!”
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