Avoid crypto FOMO and make conscious decisions
It is a part of human nature, but with the proper knowledge, crypto traders can limit the effects of FOMO.
The fear of missing out (FOMO) is a well-documented part of life by psychologists. This is the feeling of apprehension or worries about not being a part of something significant.
In cryptocurrencies, the term has found ubiquity amongst traders; acting as a force behind the investment decisions of many market investors.
The fear of missing out is akin to “following the herd”; to investing in a particular project without conducting due diligence. It’s often difficult to ignore the buzz from trending projects about the latest coin that is “about to x1000”.
However, willpower and research would help prevent investors from falling into scams, pump-and-dump schemes, and rug pulls with unscrupulous founders.
Crypto FOMO has always plagued traders, and the concept has reached frenetic levels in cryptocurrencies.
In November, Bitcoin reached an all-time high of nearly $65,000. While other cryptocurrencies rode the bullish waves to post new record highs.
For investors watching from the sidelines, it’s easy to feel left out of the party. Several investors made the brash decision to buy assets at the top; then a few months down the line, they are writhing in regret.
A keen example of crypto FOMO is the infamous Squid Game project that rose by over 1,000% in hours; baiting thousands of investors to sink funds to be part of the mania.
The project lost a chunk of its value in what the BBC described as a rug pull, with creators running away with $3.8 million.
Stories like this abound in crypto. However, with the right information and strategy, you can trade with confidence and you don’t have to feel FOMO.
Here are some ways to avoid crypto FOMO and trade like a professional
Missing out is part of the game
As a cryptocurrency investor, it’s important to understand that it is nearly impossible always to catch the latest trend. It’s okay to miss some winning opportunities; there’s no shame in that.
90% of crypto investors missed out on buying Bitcoin for pennies back in 2010. Bitcoin maximalists probably doubted Ethereum’s potential in 2017.
It’s part of the game. But unfortunately, chasing every buzz will do more harm than good to your crypto portfolio in the long run.
The saying perfectly sums up the entire crypto trading, “you win some, you lose some.”
Carry out your due diligence
One sure-fire way to overcome the feelings of FOMO is to conduct personal research on projects. Do this before investing in them instead of banking on the words of friends and family.
A simple look at the project’s whitepaper or social media pages would shed light on the prospects of the asset.
Stick to your trading strategy
Research into the antecedents and qualifications of the project’s founders first. This is a great way to identify whether or not a project is viable.
Usually, a project with anonymous founders is a major red flag. This is because of the increasing rates of rug pulls in the ecosystem.
Investors should also look at tokenomics, use cases, and price action to prevent buying into an asset at the top. Successfully trading cryptocurrencies requires investors to have a trading strategy.
Using a strategy helps instill a sense of discipline in traders. This is also to prevent being carried away by the hype of new projects in the space.
The Dollar-Cost-Averaging (DCA) is one strategy employed by crypto traders to help counter the effects of FOMO. It involves splitting the investment sum into periodic purchases in an asset or group of assets.
The end goal is to reduce the effect of volatility; this is preferred by leading traders because prices average out in the long run.
Other trading strategies abound, but the bottom line is that whatever pattern you adopt, follow through till the end. The system might not bring overnight success, but steady profits can be obtained in the long run.
Chasing every buzzing project is a terrible trading strategy, so take a deep breath and stick to your script.
Understanding market cycles
Veteran traders understand that the crypto market is segmented into cycles that often begin with a Bitcoin bull run.
Halvings trigger Bitcoin bull runs. After the bull run ends, capital flows into larger altcoins sparking what is known as altcoin season. Traditionally, after altcoins with large market caps have their moment, some small altcoins begin their rally.
An understanding of the market cycles in crypto will help you avoid feelings of missing out; you know the assets that will be added to your portfolio at any given point.
Cast a wide net
Investors with an intense apprehension of missing out can diversify their portfolios. This is advisable to have a healthy mix of several types of crypto assets.
A small percentage of your portfolio may be earmarked for buying various cryptocurrencies. This will help maximize your chances of hitting a winner. However, this is a risky strategy and should only be carried out with a fraction of the portfolio.
Investors can use a crypto portfolio tracker like CoinStats to track and manage crypto portfolios. It is an intuitive way to keep an eye on all your holdings across several exchanges and wallets.
The ability to create a watchlist of assets you’re interested in is one way to prevent FOMO. This will enable you to be cautious before making decisions.
FOMO is one of the biggest reasons why traders invest in new cryptocurrencies that often turn out to be scams. It is a part of human nature, but with the proper knowledge, crypto traders can limit the effects of FOMO.
Proper money management techniques, taking a break, and zooming out can help users make conscious trading decisions without external influences. A proper understanding of market cycles would do a great deal in staving off the fear of missing out.
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