The appeal of cryptocurrency: a story of fear, anxiety and fomo
In the world of finance, there is an increasing phenomenon that has left investors, traders and even occasional users who feel anxious and uncertain. It is known as the fear of missing (FOMO). But what is behind this psychological trap and how does it affect the prices of cryptocurrencies? In this article, we will immerse ourselves in the psychology of the FOMO and will explore its impact on the cryptographic markets.
What is Fomo?
The FOMO is a common psychological phenomenon which makes individuals feel anxious or fearing to miss opportunities. It is often triggered by social media platforms, where users are constantly presented with updates on the successes and failures of others. It creates a feeling of discomfort, as if the person who looked at the life of his friends could miss an exciting experience.
In the context of cryptocurrency, Fomo takes a different form. When investors see how other traders or investors earn money on the market, they feel likely to miss potential gains. This anxiety can lead them to make impulsive decisions, such as purchase or sale on the basis of short -term market fluctuations.
FOMO psychology
Several factors contribute to the psychological phenomenon of Fomo:
- Social media: Social media platforms like Twitter, Reddit and Facebook are breeding grounds for FOMO. Users are constantly bombed with updates on the successes and failures of others, creating a feeling of competition.
- Fear of missing (Fomi): The fear that you can miss an opportunity or an exciting experience is a powerful driver of Fomo. This fear can be exacerbated by the constant flow of news and market updates.
- Anxiety and uncertainty: The cryptocurrency markets are intrinsically volatile, prices fluctuating quickly due to various factors such as regulatory changes, technological progress and global events.
The impact on cryptography prices
When investors know Fomo, their emotions can lead them to make impulsive decisions that ultimately cause losses or gains. Here’s how:
- Spontaneous purchases or sales: impulsive buyers and sellers can react quickly to market news, which makes prices quickly fluctuate.
- Speculations and exchanges: The desire to “penetrate on the ground floor” of a promising cryptocurrency can lead investors to outclass or make reckless bets, ultimately causing losses.
- Psychological bias: Investors may be more likely to make emotional decisions based on short-term market fluctuations rather than analyzing the underlying fundamentals.
Examples of Fomo in crypto
To illustrate the impact of FOMO on cryptography prices, consider some examples:
- Bitcoin (BTC) and Ethereum (ETH): In January 2020, Bitcoin experienced a price increase after the collapse of the global exchange of MT Gox cryptocurrency. Investors who missed this opportunity due to FOMO have often regretted their decision.
- Altcoin Craze
: The Altcoin craze at the end of 2017 2018 was partially fed by FOMO. Many investors, eager to get involved in the cryptocurrency space, have bought large amounts of tokens without fully understanding their value or risks.
Break the FOMO cycle
To avoid a victim of the FOMO and its impact on the prices of cryptography, it is essential to develop a more nuanced understanding of the markets. Here are some tips:
- Stay informed, but not over-informed: continuously find out about trends and market fundamentals, but avoid excessive conclusions based solely on short-term market news.
- Diversify your portfolio: Repair your investments on various asset and cryptocurrency classes to minimize exposure to any unique market or trend.
- Focus on long-term growth: prioritize investment in cryptocurrencies with a strong proposal for an underlying value and focus on long-term growth potential.