The FOMO Effect in Crypto Trading

FOMO is an acronym that stands for "Fear Of Missing Out".

What is FOMO?

“Fear Of Missing Out” – FOMO for short – is a term that is used to express the anxiety you may feel if you don’t act quickly when making trading decisions. Its essence is that procrastination can cause you to miss out on a potential opportunity.

For example, you might experience FOMO if you see a coin you don’t own going up in value. The green line going up can cause some people to panic, prompting them to rush out to buy the coin they think is skyrocketing in value.

Fear of missing out on the next big gain, the coin everyone wants, or becoming a trader left behind, can be a driving force behind price swings.

Of course, cryptocurrency trading can also be a game of rumor and emotion, and FOMO can play a key role when traders decide what to buy, sell or hold. FOMO can even encourage some to switch markets or withdraw their assets entirely from a particular market by placing them in their own cold wallets.

While the emphasis on FOMO is most often on the fear of missing out on a profit-making coin, the opposite can also be true. Bitcoin’s plummet can be caused by a multitude of reasons, with transactions occurring at an incredible rate. Rumors about government regulations or that the markets are out of whack are enough to cause many to inflate the price.

When the value of coins rises sharply to an all-time high, traders may also want to invest while it is hot, prompting others to follow suit. Slowing down means you might sell when the price has already fallen again, at which point you will miss out on a big profit from the price peak.