While crypto was once an overlooked asset, it has become one of the most popular investments. One reason investors love them is that they don’t involve a mediator; thus, transactions are hassle-free and faster. During crypto’s evolution, there were many stories about people becoming rich through their investments which made many people join the craze. After all, who would want to miss out on such an opportunity to make a fortune in a seemingly effortless way?
And yet, cryptocurrencies are highly volatile, and among all those successful investors, there are also those losing a bundle of money when investing. But why is that so? Why do some people make a profit while others face significant losses? Some may be tempted to say that it’s a matter of luck, but it actually has a lot to do with how you approach the crypto market and whether you act based on reason or emotions. When it comes to crypto investing, you should always rely on facts, not news, rumors, or someone’s opinion. Sadly, many investors succumb to FOMO Investing, which messes up rational thinking, leading to bad decisions.
Understating FOMO investing and its risks
FOMO, or the fear of missing out, is a concept introduced when the digital era began. Since then, the acronym has become widely known, as many people have experienced FOMO throughout their lives in one way or another. In the crypto world, FOMO is the fear of missing an investment opportunity that could possibly lead to significant gains.
To avoid that, investors buy crypto when its price skyrockets only to see it crash at short notice or sell it too early because they’re scared of losing money. In other words, FOMO leads to impulsive decisions, costing investors their financial security because they lose significant sums. This affects their mental health, as they may find themselves struggling with debt.
How to spot crypto FOMO Investing
You may be falling into the FOMO trap without even realizing it, so it’s essential to watch out for these signs:
- Constantly checking prices. If you find yourself checking crypto prices every 5 minutes, that’s a red flag. Crypto shouldn’t be the only thing on your mind, so if you only focus on this aspect, it may be a sign that you’re dealing with FOMO.
- Herd mentality bias. The crowd can influence your decisions if you aren’t careful. If people are investing in a specific asset believing they could hit the jackpot, that doesn’t mean you should do the same. If you buy a digital coin without checking the facts first, you may have a herd mentality bias. Endlessly scrolling through social media. FOMO is mainly triggered by social media. Suppose you’re constantly checking rumors and crypto-related news several times during the day on your social media accounts and feeling anxious that you may miss important information. In that case, you may suffer from crypto FOMO.
Is it possible to overcome FOMO?
FOMO affects many people, both in the crypto space and beyond. The good news is that you can avoid or reduce it by implementing some practical steps.
Notice when you fall into the trap
You can’t control something you aren’t aware of. The first step in dealing with FOMO Investing is noticing when it happens. It’s okay to feel left out sometimes – it’s something that people experience often. If you’re on the verge of making a trade because you feel anxious, take a step back and realize what’s happening. Distract yourself for a while if necessary, and once the emotions subside, think about the consequences of acting without relying on genuine information.
You’ve likely experienced FOMO Investing in the past, so look back at that experience and try to identify your triggers. If social media leads to your fear of missing out, consider limiting your time on the platforms. The goal isn’t to completely eliminate FOMO but to manage it effectively, so it doesn’t take control of your decisions.
Check the facts
Avoid following the crowd blindly, and do your own research instead. No matter what crypto you want to invest in, you can’t just rely on what other people are doing. Suppose you want to invest in bitcoin. If you’ve just joined the crypto market, don’t only learn how to buy bitcoin – look into the asset’s history and evolution, learn about its pros and cons and other digital currencies that could be a valuable addition to your portfolio. Double-check information, as investors tend to be biased and only highlight the good aspects of their preferred digital coin, and try to be objective when reading crypto-related news.
Have an investing plan
Don’t start investing without a plan! You must establish your short-term and long-term goals and exit plans before making any decision. Also, you should outline the coins in your portfolio and what crypto you want to buy. Taking the time to create an investment plan will help you avoid FOMO because you’ll have a clear strategy in place and, thus, be able to stay focused on your goals.
Think long-term
Many crypto investors join the market with a long-term mindset because they know that building wealth takes time and can’t do it overnight. You must learn to be patient and stay calm even during critical situations. There’s no place for emotions in the crypto market – in fact, you need nerves of steel. Avoid the get-rich-quick mindset – that will only lead to disappointment and bad investing decisions. Instead, be in the game for the long term and don’t make your crypto goals the most important aspect of your life.
Don’t compare yourself to others
Comparison never helps. Never! In fact, it only becomes a vicious cycle; once you start comparing yourself to other investors, you become unhappy. Remember that your path is different from someone else’s, and what works for them may not work for you. Use your expertise and skills and focus on finding your unique winning strategy! So, what if you missed out on some opportunities? It’s not the end of the world! It would be worse if you bought a coin only because you trusted rumors.
The bottom line
Investors believe they will miss out on massive profits if they don’t chase the latest opportunities, which often leads to careless decisions and losses. Giving in to FOMO Investing prevents you from making progress as an investor, so it’s essential to focus on building discipline and staying up-to-date with what happens in the market. That will help you make decisions based on facts and stop FOMO from taking over your life.
Read Also : Why a professional Accountant for payroll management?
