What is crypto FOMO, and how to avoid it?

While surfing the internet on a lazy Sunday morning, you realize that almost everyone you know now has a new coin. The celebs are promoting it, your friends are posing with it. It’s everywhere. You begin to think that by not having one, you are missing out. You give in and, on an impulse, you end up buying it. That’s crypto FOMO right there for you. That’s how it always starts.

And it usually doesn’t end well.

So don’t be like that. Read on to learn all about this very contemporary fear. Let’s dodge that FOMO bullet together.

What is crypto FOMO?

FOMO is short for the Fear Of Missing Out. Since the community is key in crypto, FOMO ends up playing a huge role in the market. When an investor falls prey to this totally avoidable fear, they make investment decisions based on a trend, rather than ensuring due diligence.

Remember how Tesla CEO Elon Musk’s favorite meme token Dogecoin became all the rage last year? The business tycoon’s repetitive positive tweets about it had a huge role to play in market sentiments favoring DOGE. The price went up overnight, and the rest was history. That was FOMO in action for you. The multiple volatile hikes that occurred then weren’t exactly wise, wealth-generating investments from the community.

But how do we know that? And how do we know when FOMO is spurring a trend? After all, it is true that the crypto market witnesses trends on a daily, weekly, monthly, and annual basis. And these trends in turn make for intense negative or positive market sentiment. It is also true that investors do track such sentiments. So where’s the problem?

Well, the issue is that sometimes, market sentiments lead people to invest in assets when they are priced at their highest or sell them at their lowest. Or take investment decisions that they later regret or have to rationalize. When that happens investors also lose hefty amounts of capital.

That’s why you need to know how to recognize and avoid FOMO.

How to avoid crypto FOMO

The fact that you’re here reading this means you’ve already taken the first step. Now, let’s get the rest done. All you really have to do now is read and implement. Okay?

Here’s how you can start.

Learn to do your research well

Crypto is definitely no quick fix for unstable finances. The easiest way to dodge the negative impacts of FOMO is to quit on the idea of easy money. Always plan your investments with thorough research. Underneath the successful short-term trades are years of experience and research.

To take your research to the next level, you could read all about short-term investments and passive income on this very blog.

Furthermore, another important aspect of DYOR is finding credible sources. To do this, investors must seek information from news sources.

Never take information at face value. Always attempt to verify reports before making any investment decisions. However, using reputable sources will help mitigate the risks associated with crypto FOMO.

Remember this: Crypto market rallies are cyclical

Investors have to fully understand that the crypto market is cyclical. As crypto assets are highly volatile and subject to wild price swings, bad spells don’t last forever. It is also important to remember this.

No matter how exciting things may seem at first, there is always a good chance that the bubble will burst too. When that happens, it will cause your investments to lose value rapidly.

Overall, make sure your strategy takes this into account. Develop an exit plan if prices start going down strongly; otherwise, you may find yourself losing money very quickly.

Craft a sound investment plan

Developing a strategy to guide you on most days is essential, especially when investing in new technologies or financial products like crypto. Before putting your money into crypto, make sure you have a clear understanding of what you’re looking for. Do your research so that you know the fundamentals of the asset class—its price, how safe it is, and so on.

Additionally, you, as an investor, must understand all of the risks involved. The investment plan should factor them in. Doing so will help reduce the chances of you squandering your money on an unsustainable project.

Filter out scams

In a FOMO-driven situation, the value of a project will go up so much it will definitely be exciting. Scammers look for people excited about new opportunities. Be patient and do your research before making any investment decisions. And avoid making decisions hastily.

Also, learn from the past mistakes of others by learning about scams. You can begin with this article here.

In the end, remember, there is always some risk when trading or investing in any new asset class. And there will always be some missed opportunities. So don’t let FOMO get the better of you.

Conclusion

It’s important to remember that crypto is a risky investment class, and you can’t always expect things to go your way. It’s also important to be aware of what risks crypto investments pose. For instance, similar to traditional investments, even crypto investments aren’t immune to corruption or fraud. That is why it is essential for investors to keep an eye on the market all the time.

Even in the best-case scenario, when you get lucky and make some money off crypto, don’t forget that things can still be unpredictable.

The bottom line is: Develop a guiding strategy based on your goals and expectations, learn from previous mistakes and successes, and DON’T let FOMO take the driver’s seat!

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