With the arrival of the new bullish cycle of Bitcoin, FOMO has also appeared again. Although some analysts believe that we have not yet seen the true fear of not buying on time, the truth is that any parabolic movement in the market indicates that there is real concern about missing a great opportunity. Specifically, this is what FOMO means. They are the initials of 'fear of missing out' , that is, the fear of being left out.
When the market begins to rise, it is normal for those people who normally follow the price of Bitcoin to feel an internal need to make purchases. Seeing the price go up and not already being positioned in the market creates a feeling of anxiety that is quite difficult to control. This is, in fact, one of the main causes that people enter to invest in cryptocurrencies and finally leave in losses with much discontent.
Although the psychology of the markets promotes that you have to operate with a cool head, it is normal that when operating with some type of risk we let ourselves be carried away by emotions. In this article we are going to analyze exactly what FOMO is in the crypto market and how it really affects both the market itself and investors.
FOMO in the cryptocurrency market
By saying that FOMO is a market engine, we are obviously not talking about it being the main indicator that makes the price rise. However, it is true that on many occasions, the high volatility to which Bitcoin is subject is due to this emotional instability. If we add the fact that it is a market with little liquidity, that is, that any large player with significant capital can move, to the indecision and fear of many other investors, it is normal that FOMO has been the cause of numerous occasions. irrational movements in the market. It is also one of the main causes of bad trading decisions .
But, when does FOMO occur?
FOMO occurs when the price is rising. It is normal that people do not dare to take action until they see a certain proof or sample that something is indeed going to offer them a certain benefit. For example, a person is capable of reading dozens of times by different means that the price of Bitcoin is going to rise and reach the moon (as they say in this market), however, until that person does not see that the price is going up and that forecast is coming true, is not encouraged to buy .What usually happens is that by not taking the positions in advance, you enter the market without a strategy and hastily. This is where the definition of FOMO purely comes into play. It is at this moment that the investor really feels that if he does not enter now, immediately, he is going to lose that movement in the price that he has been seeing being announced for so long. As a result of this, we have a lot of people entering the market at a bad time, motivated by this fear.
The Consequences of FOMO
When this growth in the price of a certain asset is produced by a psychological factor and not by real demand, in the end the most normal thing is that the vast majority of these people who have entered to buy when FOMO reigned finally see how the market gives them a kick and leaves them in losses. The reason is very simple, the operators that if they took their positions in advance, will always take profits . That is, when a person buys Bitcoin at the top due to FOMO, he is buying from another investor who has already taken advantage of the rise and wants to close his operation obtaining profitability.You are always going to see profit taking. That is, the market will always correct and provide new opportunities. Falling into FOMO is typical of people with little experience in the markets. Fortunately or unfortunately, since Bitcoin is an asset in which everyone can invest with very little money, there are many people who are discovering the world of finance thanks to it and it is normal for them to fall into this type of psychological trap. .
How to avoid falling into the fear of missing out on the opportunity
It is important to emphasize that FOMO is not exactly a market manipulation. It is a purely psychological factor that must be controlled by each individual investor. The main weapon that you can have against the fear of missing out on an opportunity is experience. However, even for a person who is new to investing in Bitcoin, it will be relatively easy to avoid FOMO by keeping two things in mind:The market ALWAYS gives second chances
Don't be afraid to miss the opportunity! The market moves 'zig zag', although it may seem that the opportunity is running out, it is not true. This is a long-term game and it's just getting started. Bitcoin is only 10 years old. There will always be strong corrections that allow us to enter the market with guarantees of not falling into losses. Take price drops as an opportunity to buy cheaper and never sell when the price has been falling for a long time .If you didn't buy cheap, don't buy expensive
That is, if you saw that Bitcoin was worth three thousand or four thousand dollars and you did not buy thinking that it was going to go to zero, why buy now when the price has been going up for a long time and it already has a value of more than double that of the first time? What did you have the opportunity to buy? This way of operating is what makes the vast majority of people who invest in the markets lose money. They buy when the market has been going up for a while and they sell when the market has been going down for a long time. As you can see for yourself, you don't have to be an expert to understand that what you have to do is just the opposite.With all these recommendations, it will surely be easier for you to develop a correct mentality to trade Bitcoin and cryptocurrencies without making the typical mistakes of novice investors.
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