How to Deal with FOMO (Fear of Missing Out) in the Cryptocurrency World
Cryptocurrency and the blockchain industry are always in motion. Some newcomers may become more or less dominated by and addicted to the constant market movement, or they may become trapped in a situation of "FOMO," a term popular in the cryptocurrency world. Due to the particularly attractive asset price to investors, it may result in the unreasonable loss of assets as well as health and quality of life. You'll learn about FOMO in the cryptocurrency world and how to deal with it in this article.
What does FOMO mean in terms of cryptocurrency investments?
FOMO is the fear of missing out on things or falling out of favor. Teenagers and people in their working years, between the ages of 18 and 35, are most likely to exhibit it. It can be applied to a variety of social situations or businesses.
In the cryptocurrency industry, FOMO happens when people irrationally choose to trade or invest in crypto assets by considering only a portion of the data they receive and without verifying the data's source or accuracy. It is a concern about missing out on the next big thing in the cryptocurrency world, which could present an opportunity to make a huge profit. As a result, FOMO is frequently claimed to be a factor in the decision to trade cryptocurrencies, which is based on feeling rather than reason.
In the world of cryptocurrencies, FOMO typically causes new traders to purchase assets at the highest price but sell them at the lowest. The consequences of crypto FOMO can be worse than losing money because they can result in other harmful circumstances like depression, anxiety, and family rejection.
Examples of cryptocurrency FOMO
Most often, FOMO occurs when a large number of new investors end up buying assets at the highest price because they recognize that the investment projects are succeeding and believe they will be able to make a large profit in the future. They are thus afraid of missing the chance, especially when online social media mentions price changes or their intriguing coins. However, because they are worried about losing potential future profits, FOMO can also prevent traders from selling their assets at the highest price. By buying at the highest price but selling at the lowest, both types of traders run the risk of losing money in the long run.
The well-known meme coin in 2021 is an example of crypto FOMO that people are familiar with. The tweets from world leaders caused such a huge trend that those who did not own the token at the time experienced FOMO. This increased the level of token fluctuation.
Effects of FOMO on Health and Quality of Life
"A surprising discovery is that our relationships and the happiness in them have a significant impact on our health," said Robert Waldinger, the school director, of his study of more than 80 years of Harvard schoolboys about what makes a good life. These concepts can be applied to cryptocurrency investments as FOMO not only has an impact on the investment portfolio but also negatively affects one's health and quality of life.
Losing a significant sum of money can have a profound impact on a person's mental health as well as other aspects of their life, such as relationships and interactions with friends and family. If there is no special treatment, social well-being may also worsen or become abnormal.
The warning signs of the FOMO circumstances
The following are some key behaviors that could point to potential FOMO-driven investors:
- Addicted to social media more than usual, especially for tracking trends and trading cryptocurrency.
- Desire to trade or invest only because of the recent popularity or social hype of certain assets.
- Buy cryptocurrencies as soon as they learn or acknowledge that they will bring in a sizable profit.
- Consider how much money they can gain from trading.
These actions reveal irrational decisions, which could later put people at risk.
How can traders avoid FOMO?
- Study and analyze before trading. Avoid trading in line with social media trends or those set by well-known people. Follow reliable media channels and carefully check your information sources.
- Keep regular records of your investments or trades along with your strategies, risk management plans, and temperament to see the difference between the outcomes of planned and FOMO trading decisions.
- Set up a clear trading strategy and stick to it. This can aid in preventing emotional investing.
- Planning and developing risk management strategies will help you understand when to take a profit and when to cut losses.
- Avoid looking at the chart or other relevant investment information and find other things to do if you find yourself in the FOMO investment situation.
- You should realize that there is always another opportunity worth waiting for if you make the wrong choice in a FOMO investment situation.
Owning more trading "experiences" can also help you better manage your emotions and decisions over time if you already have a solid investment strategy in place to handle FOMO. You should be aware that nobody can consistently succeed and turn a profit. Many people experience FOMO situations and suffer significant effects. Knowing the repercussions can help investors make more deliberate decisions each time they make an investment.
Source:
https://www.investopedia.com/deal-with-crypto-fomo-6455103
https://coinmarketcap.com/alexandria/article/what-does-fomo-mean-and-how-do-i-deal-with-it
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