The FOMO acronym, i.e. ‘the Fear of Missing Out’, is not a new concept. According to modern psychology, it is a type of social anxiety situation in which the affected individual feels they might be missing out on some of the finest life or professional experiences.
This concept is especially highlighted today with the increased influence of social media. Namely, people can easily be swamped by the shared positive experiences of other social media users that are predominantly exaggerated.
Ultimately, this may give rise to a feeling of overwhelming desire to keep up with the others, thinking that if you don’t, you risk missing out on a unique encounter, a memorable event, or, in the world of cryptocurrencies, a lucrative investment as a result of a sudden price rally.
What Does FOMO Denote in Crypto Slang?
In the financial realm, the ‘Fear of Missing Out’ phrase is commonly used in relation to cryptocurrencies to express anxiety about the possibility of losing an exceptionally lucrative investment opportunity. More often than not, this fear occurs whenever a crypto investor indulges in an irrational projection regarding a possible investment.
For example, some crypto traders become overnight billionaires after taking advantage of a cryptocurrency’s volatility (eg. Bitcoin (BTC), Ethereum (ETH), or some other altcoin) and determining the best moment to buy in some coin based on the asset’s price fluctuation. This type of instant success has acted as an incentive for many new traders to begin fantasizing about attaining the same success on the cryptocurrency market.
As high hopes often go hand in hand with irrationality, the fear of missing out on the best outcome of a deal becomes an inevitable companion to traders. This is especially true during a bull or bear market rally when traders are more inclined to experience FOMO.
Bull Market vs Bear Market
Numerous similarities exist between the crypto realm and traditional financial stock markets. As an example, they both use similar lingo and have comparable practices in their respective markets. The Bull market and bear market are two concepts that are common to both fiat currency and crypto markets but are also strongly related to the FOMO concept.
What Is a Bull Market?
In terms of cryptocurrency trading, a bull market refers to a market situation when the price of the coins and tokens are on the rise. The ‘bull run’ occurs when traders expect a favourable trend in the rise of cryptocurrency rates that will persist for some time.
By definition, a bull market denotes the span of time during which most traders invest in new digital assets, the coin demand exceeds the supply, the confidence of the investor is on the rise, and prices of the digital assets reach their all-time high (ATH).
When the value of a cryptocurrency increases extremely fast, traders refer to this phenomenon as mooning. Exactly when the cryptocurrency’s price is going ‘to the Moon’, the FOMO strikes the trader as an overinflated enthusiasm. Sometimes, this investment fervour triggered by the bull run may be overinflated and lead to the use of unreasonable trading strategies, as a result of the rising fear of missing out on a lucrative opportunity.
What Is a Bear Market?
Borrowed directly from the Wall Street stockbrokers, the term ‘bear’ is used whenever an investor anticipates that the price of a coin or a market will plummet and hopes to benefit from the price drop. In other words, the environment is favourable for the sale of digital assets. Because investors are worried about their crypto assets’ future value, they start selling them during a bear market.
In such cases, the number of sellers is typically larger than the number of buyers on the market. Consequently, investors may suffer anxiety and fear of losing their assets as a result of the bear market situation.
What Do HODL, FUD, and SHILLING Mean in Bitcoin Lingo?
The cryptocurrency market price is often accompanied by Fear, Uncertainty, and Doubt (FUD) – a concept that is regularly communicated on social media sites. Rather than relying on certified statistics, cryptocurrency investors are sometimes swayed by the pessimistic information on the price trend of certain currencies. Propagating allegations that an asset’s blockchain is a scam, for instance, might easily trigger a price drop when fear sets in.
Easily spread by influential personalities in the crypto ecosystem (such as Elon Musk), these types of rumours have the power to give rise to fear, uncertainty, and doubts in the minds of investors, despite the fact that they’re rarely based on the real market position of a currency.
In the context of rumours surrounding some coins on the crypto market, the term ‘shilling’ easily comes to one’s mind. Namely, some of the more experienced ‘bear’ players in the crypto field often deliberately promote small market cap coins by spreading false news about them (shilling). In this way, they are falsely inflating (pumping) the price of the digital currency in question. The purpose of the shilling is to entice some novice merchants to purchase a particular coin. If their strategy works, the next step of the shill is to sell (dump) their coins at the increased price.
As you can see, this pump and dump strategy goes hand in hand with shilling, which additionally increases the FUD, and makes the traders HODL. HODL? It makes them ‘Hold on to their dear life’, i.e. keep their coins until the situation on the crypto market stabilizes and becomes more favourable.
Opposite to HODlers, there are traders labelled as bag holders. In fact, the bagholders start with HODLing, only to SODL (Sell for Dear Life) when the investment’s value depreciates to zero.
What Are the Pros and Cons of FOMO in Cryptocurrency?
FOMO may present certain advantageous possibilities for traders such as attractive buying and selling opportunities. On the other hand, overinflated expectations of a lucrative deal can lead to excessive trading and incorrect actions on the market, which can result in a substantial loss of digital assets.
A Few Words Before You Go…
Bull and bear cryptocurrency markets occur on a regular basis, which means that crypto traders frequently experience the fear of missing out, especially when it comes to newbies in the crypto community.
Regardless of whether you are unfamiliar with the cryptocurrency slang, do know that fear of missing out is only an imaginary concept that can easily be turned into a word of positive reinforcement by taking a courageous step forward into the crypto realm, and – of course – by consulting relevant sources on the latest cryptocurrency movements on the market and crypto trading.