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FOMO is an acronym for Fear Of Missing Out and refers to a feeling of anxiety that a person is either unaware of or is missing out on an event, experience, or even investment decision. In crypto, FOMO can also refer to a type of news with headlines, such as “hurry before you miss this investment opportunity”.
The term FOMO was first used by Dr. Dan Herman, a marketing strategist and researcher. He published his academic research on FOMO in The Journal of Brand Management in the year 2000. Harmen believes the concept of FOMO has become more widespread through social media.
Dogecoin and Shiba Inu are two great examples of how FOMO affects the crypto markets.
In 2021, Elon Musk made several tweets about Dogecoin that incentivised investors who haven’t already bought Doge to buy this token. This FOMO caused a surge in Dogecoin’s price. In fact, most of Dogecoin’s price volatility in 2021 was because of such FOMOs.
Late 2021 was a weird-in-a-good-way year for dog-themed tokens. After Shiba Inu’s initial pump, many news sources and crypto influencers started talking about the token. This FOMO caused more investors to buy this token, and the price of Shiba Inu kept surging.
Below is an infographic of some terms related to FOMO.
JOMO (Joy Of Missing Out) is the opposite of FOMO and refers to the times when you enjoy what you’re doing regardless of the trends and hype. JOMO is a response to FOMO and encourages you to keep doing what you do without worrying about “missing another shitcoin investment opportunity”.
FOMO is caused by the Amygdala, the part of the brain responsible for detecting if something is threatening survival. Amygdala recognises the feeling of being left out as a threat and, in response, generates stress and anxiety. People who are already highly sensitive to environmental threats or are under mental pressure are more likely to experience FOMO. This includes people who struggle with anxiety, depression, or even PTSD.
Although FOMO is a negative state of mind, you can identify it using a list of these symptoms to help the caught-up-in-the-FOMO person identify them and become self-conscious again.
Crypto FOMO happens when someone makes impulsive investment decisions based on a piece of information not coming from a valid source, and usually, it doesn’t have factual backing. FOMO originates from the investor’s mentality, and here are some mentalities that can cause FOMO in crypto investments.
The crypto market knows how much early NFTs or Shiba Inu investors have made; thus, people constantly look for the next crypto gem to increase in value.
Although crypto FOMO is referred to as a profit-oriented move, it is also done to avoid big losses and make more “confident” crypto decisions.
The crypto market provides fresh and untested investment opportunities, which can spark the interest of the average TradFi investor.
Social media platforms play the main role in the spread of crypto FOMOs. These social media hypes caused volatility and FOMO around assets such as Dogecoin and Shiba Inu.
Also, social media FOMO promoted the 2021 bull run. News resources covered Bitcoin’s new ATH of $69K, resulting in many non-crypto users buying Bitcoin.
Scammers are well aware of the power of social media and try to create FOMO around their scam projects to manipulate investors into thinking the project is legit. That’s why you always need to DYOR to avoid making impulsive, FOMO-driven decisions.
When an investor loses money from a FOMO-based decision, it can impact them mentally if they aren’t prepared for such losses. This mental turmoil can affect other areas of their lives, such as relationships, family connections, friendships, and other aspects of their personal life. The person can experience troubles with their social life, which might lead to depression if not taken care of.
You can follow certain strategies to avoid getting FOMO and possibly losing all your money in one impulsive decision.
FOMO, or Fear of Missing Out, means realising that one is missing out on an investment opportunity. It encourages investors to make uncalculated, impulsive decisions that usually lead to losing money instead of making any profit. FOMO can take a mental toll on investors who have lost their money and can affect other areas of their life.
Now that we know all about FOMO and its causes, let’s answer some frequently asked questions.
Traders use investment strategies and emotional tactics to avoid getting caught in FOMOs, some of which are as follows.
Regarding investment decisions, getting FOMO easily means you don’t have enough faith and confidence in your investment thesis. FOMO tends to awaken a sense of greed, which oftentimes won’t lead to making proper investment decisions. Learn how Fear and Greed affect your crypto investment.
Even though crypto investments tend to have higher profits in a shorter time span than other assets, going nice and slow with your investments is still recommended.
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