Owing to the booming popularity of Facebook, YouTube, Instagram, and TikTok, we now have a front-row seat to the highlights of our friends’ lives. When we see other people’s highlight reels, we experience a fear of missing out (FOMO). It’s a genuine sentiment that many of us struggle with in this digital age. You’re afraid your friends are doing something amazing, but you’re missing out on all the fun. In the context of cryptocurrency, FOMO can drive us to make impulsive decisions, such as buying and selling hastily, without carrying out research or analysis.
Even if FOMO is strongly correlated with social media usage, everyone feels a certain level of anxiety at different times in their lives. In the cryptocurrency world, investors get FOMO when the prices rise, their emotions being augmented by social media posts from others bragging about their life-changing investment returns. A bear market rally can also be motivated by the fear of missing out, so it’s recommended to be cautious and prepared for potential losses. The ETH price is struggling to break above $2,000, although it’s gained 35% in 2023.
A Brief Overview of The Psychology Behind FOMO
The idea that you’re failing to take advantage of something isn’t by any means new; it’s just that it hasn’t been studied during the past few decades. Since the emergence of social media platforms, the fear of missing out has become more apparent and has been closely investigated. FOMO has become a widely cited motivator of cryptocurrency trading and investing. Non-participation is regarded as a mistake. More precisely, if you don’t invest in cryptocurrency, you feel you’re missing out on the next big thing and the opportunity to make profits. One indirect effect of FOMO is risk tolerance, meaning you’re prepared to handle a large amount of loss while making an investment decision.
Financial literacy may work indirectly through FOMO to impact your decisions. Financial literacy refers to the ability to understand and effectively use financial skills, including budgeting and investing. Cryptocurrencies resemble traditional financial products, but the decision-making process learned through a standard financial literacy syllabus doesn’t apply here. Giving into FOMO might result in choices that aren’t in line with your long-term financial objectives. For example, you might buy Ethereum when it’s at an all-time high because you see it doing well.
Signs You’re Struggling With FOMO
If you’re unsure you’re suffering from FOMO, here are a few signs to watch out for. See how many of the following symptoms resonate with and break free from the “keeping up with the Jones” cycle.
You Check Prices Every 5 Minutes
If you’re positioned on value, price checking can be a real problem. As a newer asset class, cryptocurrency is highly volatile, with sudden increases or decreases in price. The cryptocurrency market lacks many of the protections introduced over the years in traditional finance, so it’s very hard for investors to resist the temptation to use these standard metrics as evidence of positive momentum. You know you shouldn’t check prices every five minutes, but you just can’t help yourself.
You Have a Herd Mentality
Cryptocurrency traders and investors are prone to herd mentality – in other words, they tend to do what others are doing. We’ve all been in situations where we’ve been swept by the crowd. If you’re like everyone else, you tend to herd as uncertainty increases, following others’ opinions in your decision-making process rather than your own beliefs. If you follow the crowd and decide to buy or sell instead of doing your own research, you may have a bad case of FOMO.
You’re Obsessed with Social Media
If FOMO is the main driver behind your social media time, sit down and take a long look at yourself. Social media is a big cause of anxiety, even if it’s not the only culprit. Comparing yourself to people who seem to be doing better than you can make you feel like you don’t measure up. If you’re obsessed with social media focused on cryptocurrency trends and trades, you’ve got FOMO. Don’t be afraid; you’re not the only one.
How To Stand a Better Chance of Effectively Avoiding FOMO
FOMO can lead to negative consequences as you make decisions without a comprehensive understanding of the cryptocurrency market mechanisms or the potential risks. Overcoming the fear of missing out is easier said than done, so you might want to try these exercises when the next bull or bear market arrives.
Set Smart Goals & Work with What You’ve Got
Have clear and achievable goals to work towards and stay motivated. For many people, retirement is the ultimate financial goal. Regardless of how much faith you have in Ethereum or any other digital asset, you never ought to invest the money you can afford to lose. Otherwise, you run the risk of putting yourself in a problematic financial situation. It’s a good idea to hold a number of different digital assets to diversify your portfolio. Cryptocurrency is volatile, so perfect your trading strategies, especially your entry and exit points.
Rely On Trusted Media Outlets
Keeping up with the news is an important part of being a cryptocurrency trader or investor. It goes without saying that you should have confidence only in reliable media outlets for information on making buy or sell decisions. Come up with a list of individuals and broadcasting channels to turn to for more details; fake news doesn’t help guide trading or investment decisions. Media bias, inaccurate reporting, and sensationalism aren’t what you want.
Buy And Hold Indefinitely
Finally, yet importantly, before you even think of trading, lock in your funds and don’t sell in the foreseeable future. If the value of your cryptocurrency decreases since you’ve bought it, the loss will be realized when you’ve sold for less than your purchase price. Throughout the years, Ethereum has trended upwards over the long term. Even if the price falls due to a temporary market correction, it’s likely to recover on account of economic drivers like scarcity.
