What are FUD and FOMO?

FUD and FOMO are two acronyms you will likely stumble across often while cryptocurrency trading — particularly when researching new projects on social media. They are regularly used by investors and cryptocurrency fans to convey feelings related to a cryptocurrency project that they are passionate about.

So, what exactly do FUD and FOMO mean, and why is it important to understand them? Find out right here in this AAG Academy guide.

What is FUD?

FUD stands for “fear, uncertainty, and doubt.” It is the term used by some cryptocurrency traders to describe negative feelings toward a certain project. You or others may be accused of spreading FUD if you voice pessimism about a particular cryptocurrency online — even if it’s warranted — since some crypto fans don’t like to see their favorite projects criticized.

Some traders have been known to spread FUD intentionally. It is sometimes used as a tactic to reduce the value of a certain cryptocurrency so that others can purchase tokens before the value rises again. They can sell them and make a profit from their investment.

What is FOMO?

FOMO stands for “fear of missing out.” This is a more common acronym that’s widely used outside of the cryptocurrency industry as well as inside it, and it’s used to describe that feeling we’ve all experienced at some point in our lives when it seems like we are missing out on something good. In the crypto world, that usually means a promising crypto project.

If you’ve been following cryptocurrency for some time, you may have experienced FOMO when you see a crypto token that you didn’t invest in hit an all-time high. When Dogecoin’s value rose 12,000% last year, for instance, many of us, who understandably assumed the token would never see a significant rise in value, felt FOMO for not buying Dogecoin tokens.

Should you give in to FUD and FOMO?

When it comes to trading and investing in cryptocurrency or any other asset, it’s almost always best to try to leave emotion out of it. Giving in to FUD and FOMO can lead us to make decisions based on feelings rather than facts, and that rarely pays off.

The Dogecoin bull run we mentioned above is an example of FOMO paying off for those who purchased Dogecoin tokens at the right time. But if you visit the social media channels of almost any cryptocurrency project today, you’ll find plenty of people trying to spread FOMO for tokens based on how they personally feel about a project, and it’s unlikely most of those tokens will ever see a significant rise in value. That’s just the way the crypto industry is.

With that being the case, it’s incredibly important to do your own research when it comes to cryptocurrency investing, and only make moves that you feel are right based on the best information available to you — rather than how someone else feels. Try your best to avoid the hype around new cryptocurrency projects before you’ve carried out your own due diligence.

It’s always a good idea to take FUD and FOMO into account, since widespread FUD can prevent a cryptocurrency project from seeing an increase in token value, and widespread FOMO can have the opposite effect. But they should not be the only things you base your investment decisions on.

Examples of FUD and FOMO in cryptocurrency

Dogecoin isn’t the only cryptocurrency that has been awash with FUD and FOMO in its time. In fact, almost every cryptocurrency project sees its fair share at some point, especially if it manages to stick around for an extended period of time. There will always be people who support a project no matter what, and others who feel like it’s a bad investment.

Here are some more notable examples of FUD and FOMO in the cryptocurrency industry.

Facebook Libra
Back in 2019, Facebook’s parent company Meta announced Libra, its own cryptocurrency. There was understandably plenty of hype for the coin at the time since many investors felt that making a bet on one of the world’s biggest companies would pay off. What’s more, Meta, unlike many crypto projects, had a sound plan for how Libra would be used.

But the reception wasn’t completely positive. Regulators around the world didn’t like Meta’s plan and the idea of a company as big as Meta launching its own currency. They quickly began ramping up the pressure on the social media giant, and some countries sought to ban the Libra coin before it even arrived. Others were concerned about the privacy risks involved in a token controlled by Meta — a company that doesn’t have the best track record when it comes to protecting user data. FUD quickly began to spread.

Meta rebranded Libra to Diem in late 2020, but that did little to settle the FUD. In January 2022, Meta decided it was time to give up on Diem and the project was scrapped entirely.

Trump on cryptocurrency
Amid the controversy of Meta’s Libra announcement, former U.S. president Donald Trump played his part in spreading FUD not only on Libra but on the cryptocurrency industry as a whole. Trump suggested digital currencies were only used for criminal activities.

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” read Trump’s tweet. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity.”

Unfortunately for Trump, the tweet did not have the intended effect on the cryptocurrency industry and Bitcoin’s price continued to rise.

References

• FUD and FOMO
• 4 Momen FUD Terbesar di Dunia Kripto
• FOMO and the Psychology of Crypto Trading