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What is FOMO and how does it affect Crypto?

Fear of missing out, otherwise known as FOMO, is defined by Merriam-Webster as "a pervasive apprehension that others might be having rewarding experiences from which one is absent.

Representations of the Bitcoin cryptocurrency are seen in this illustration picture taken June 7, 2021. REUTERS/Edgar Su/Illustration

Fear of missing out, otherwise known as FOMO, is defined by Merriam-Webster as “a pervasive apprehension that others might be having rewarding experiences from which one is absent.” This means that people are afraid to miss out on opportunities for fear of failing or making the wrong decision.

Fomo has been widely attributed to the rapid rise and fall of Bitcoin’s price in 2017. You may be wondering what this has to do with crypto at all. The connection is that FOMO can cause people to act impulsively. If you are afraid of missing out on an opportunity, there is a good chance you will be more likely to make risky decisions because the fear of missing out overrides your judgment. This has serious implications in crypto markets, especially when it comes to pump and dumps.

FOMO can be compared to when you are in a dark room and someone turns on the lights. Because you didn’t know what was in the room before, you might have been afraid of what might jump out at you when turning on the lights.

Psychologists have proved that once your fears are relieved, they become less intimidating or even disappear. This is why FOMO is such a powerful emotion. People react to the sudden influx of information and forget that they may have been afraid for no real reason.
This can be problematic in crypto markets because it causes people to make impulsive decisions based on the fear of missing out, which leads to volatility as people buy quickly and sell quickly due to FOMO. This is especially true during the late-night hours when there are fewer people watching the markets and FOMO can run rampant.

Benefits of FOMO to Crypto Trading

There may be some good news for crypto traders and investors on Bitcoin Motion. Although FOMO can lead to volatility, it is also a sign of mass adoption and the growing popularity of cryptocurrency markets.

Since people are afraid they will miss out on great opportunities, this leads them to look for ways to enter the market through exchanges or other means. Furthermore, once people are in the market, they are likely to stay put even when the price drops since they do not want to miss out on gains.

However, FOMO can lead to distrust in cryptocurrency markets if people feel that the markets are rigged or that whales are manipulating prices for their own benefit. As a result of FOMO, many newcomers to crypto markets don’t do the proper research and fall prey to exit scams.

FOMO is an extremely powerful force that can cause major volatility in cryptocurrency markets, but it can also be beneficial as more and more people become educated on blockchain technology and look for ways to enter these new markets.

As a trader, you will need to pay attention to other market signals as well before making a decision. FOMO should never be your only reason for making a trade. Crypto markets are largely unregulated and carry great risk, so it is important to educate yourself and take all factors into consideration before trading.

There may be some good news for those looking to enter the crypto markets, however. As more people continue to pour money into cryptocurrency markets as a whole, it will be harder for people to sell without first buying.

Final Wrap-up
FOMO, or the fear of missing out, was a major driving force behind the rapid rise and fall of Bitcoin’s price in 2017. In fact, FOMO can be used as a psychological weapon by those who know how to exploit it. However, this is also a sign that cryptocurrency markets are quickly gaining momentum.