What Is Fear of Missing Out (FOMO)?
Fear of missing out (FOMO) is the urge people feel to quickly trade or invest in an asset, like a stock or cryptocurrency, driven by information or hype surrounding it, without conducting thorough research. It often results in buying assets at their highs when they are most popular and then panic selling at the lows when they fall out of favor.
This behavior stems from the fear that delaying the decision might result in missing out on significant profits.
FOMO is what has fueled investments into many meme coins of low value and limited utility.
What Causes FOMO?
FOMO in the crypto space is often driven by social media communities. It is based on the desire among traders and investors to find the next Bitcoin (BTC) at an early stage and make outsized returns from a massive runup in value.
Early investors in Bitcoin bought it for less than $10, and at its height, the coin was worth over $68,000.
Famous Examples of FOMO in Crypto Trading
Dogecoin (DOGE)
Dogecoin was initially launched as a satirical take on the proliferation of Bitcoin alternatives (altcoins) and Internet memes. But as a community developed around the coin, it took off in popularity.
FOMO surrounding DOGE surged when Elon Musk began tweeting and speaking about it, and many investors bought the coin in anticipation of his support driving the price higher.
One word: Doge
— Elon Musk (@elonmusk) December 20, 2020
The DOGE price reached an all-time high in 2021 and then quickly crashed when Musk made less supportive comments.
SafeMoon (SAFEMOON)
SafeMoon is another meme coin that was briefly the subject of online hype fueled by hopes of a sharp price rally and celebrity endorsements.
Everyone needs #SAFEMOON or this will be you 📈 pic.twitter.com/r9DCQG0pmQ
— Jake Paul (@jakepaul) March 27, 2021
The token price quickly soared by 2,900% in 2021 as investors with FOMO rushed to buy it. The token, however, collapsed within two months. The developers have been accused of promoting a Ponzi scheme and face multiple lawsuits and fraud allegations.
Shiba Inu (SHIB)
The Shiba Inu token gained popularity as an alternative to Dogecoin because of its meme-inspired branding. As the price began to rise rapidly, traders and investors rushed to buy SHIB to avoid missing out on potential gains despite an initial lack of utility.
The project’s developers have since developed an ecosystem around SHIB to maintain support, with the token now being accepted by numerous merchants.
How to Avoid FOMO
While it can be tempting to succumb to FOMO in cryptocurrency investing, it can be avoided by:
- Conducting in-depth research before making a purchase;
- Following reputable sources of news and commentary to help inform decisions;
- Devising a trading strategy to prevent impulsive moves.
