What is FOMO in Crypto? & How to Deal With It

FOMO is a popular cryptocurrency jargon that stands for FEAR OF MISSING OUT.

FOMO often happens when traders sense a huge move in the market, and do not want to miss out from the move, while eyeing the potential of riding the wave and making huge profit.

This fear sponsors unguided investment decisions, taking of uncalculated risks, and overleveraging. During this period of FOMO, traders will usually lose more than they gain, and if they profit well at all, it will be based on luck which is not a good way to approach the crypto market.

Let’s now dive deeper into how FOMO works.

What Fuels FOMO in the Crypto Market?

There are certain things that fuel FOMO in the market. Let us now consider them.

• Sharp Uptrend

A visible uptrend on the chart of cryptocurrencies in the market can trigger FOMO, especially amongst newbies.

• Social Media Trends

Hypes and trends on popular social media platforms like X, Reddit, about bull run or about certain cryptocurrency projects can lead to a spike in that crypto, leading to traders especially newbies not wanting to miss out.

• Hypes and Scarcity

This is another key factor that influences FOMO in the crypto market. Projects announce launch with large investor funding and seed funding with limited supply. This then drives market speculation of its launch price, and also its potential price targets even after launch that could drive FOMO.

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Examples of FOMO in Action

Over the years, there have been many scenarios of FOMO playing out in the market, due to hype and other factors. Let’s consider some of them

1. Bitcoin Bull Runs

Earlier in 2017 when the Bitcoin run started, the price of Bitcoin rallied from $1000 to around $21,000. By 2020 till the early part of 2021, institutional adoption drove the price, and it skyrocketed to $69,000.

That impulsive move made many retail traders plunge into the market buying Bitcoin at All time highs. 

By 2022, there was a major price crash that unsettled the market, and those that rushed to buy at peaks were trapped for a while.

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2. Meme Coin Surges

FOMO happened repeatedly with meme coins around 2021.

Many memes like Doge and Shiba Inu went up by humongous percentages after hypes, shillings, and listings on top exchanges like Binance. At the peak of FOMO for these projects in October 2021, they dumped heavily.

3. Luna Crash

Luna was a project that attracted lots of newbies, especially with its 20% APY yield staking system. The entire market was agog with the noise of Luna’s historic uptrend, and as the hype intensified, the price kept hitting highs.

This made a lot of people especially newbies to FOMO in at high prices, and then suddenly it came crashing by over 90% and many lost their entire portfolio.

4. Pepe Coin Pump and Dump

Pepe came to being in 2023, and rode on the wings of market hype and soon gained popularity on X, with many tagging it the next Shiba. Some days after launch, it was listed on Binance.

It later went on to grow by over 10,000%. The hype was so strong, but after a while, whales dumped it and the coin tanked with about 90% in 30 days.

5. Axie Infinity 97% Dump

Axie infinity was a top project in 2021 with games incorporated within its ecosystem. The cryptocurrency space went agog then with game players claiming to earn as high as a thousand dollars, making the project even more popular.

Users panicked and bought  into the project hoping to scoop something out of its bullish sentiment and move. Unfortunately , there was a crash of 97% and it has since never recovered fully.

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How to Overcome FOMO in Crypto

FOMO in crypto is not healthy, especially for beginners and newbies in the market. You cannot build sustainable wealth in the crypto market leveraging FOMO. Let me show you how you can overcome the urge for FOMO in the market and protect your portfolio.

1. Set a Clear Investment Plan

To build a sustainable portfolio and avoid FOMO in the crypto market, set clear investment goals. Plan your entry into crypto projects and plan your exit.

Go for projects that have well defined long term goals and milestones that can potentially drive up their adoption and price.

2. Deep Research

Carry out well detailed research on coins before buying them.

Don’t follow hypes blindly, go for utility tokens and projects. Study their whitepapers, litepapers, and web contents to know more about them before investing.

3. Avoid Chasing Trends

One of the best ways to avoid FOMO is to avoid chasing trends.

Market moves are always propelled by slight retracements. Always wait for retracements before adding positions in the market. Wait for clear setups and always have a valid reason for taking trades.

4. Learn to Hold Your Gems

One of the most common mistakes of newbies, is trying to sell a project they researched and invested in, to get quick gain in projects that are trending.

Most times they end up losing the whole capital or have their portfolio reduced to rubbles. Always hold your gems.

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Conclusion

FOMO in Crypto is a dangerous way to trade. As a beginner, you cannot build a solid portfolio in the crypto space by leveraging forced trades and hypes. It will only drain your portfolio and expel your mental health to the trash.

You should approach the crypto market strategically, and not emotionally.

Plan your entry and exit carefully. Knowing where and when to buy is not the only strategic thing to do, knowing when to take profit and sell is also key, and top platforms like Breet can be explored to sell your crypto assets.

Frequently Asked Questions About FOMO in Crypto

What does FOMO mean in Cryptocurrency? 

FOMO means fear of missing out. It’s the sudden panic to buy a coin after a sudden uptrend move in the bid to catch some profit.

How do I know if I’m investing because of FOMO?

You know you are investing because of FOMO if you invest without doing any research, if you invest and you are panicking while checking the price chart every minute, and if you invested more than you initially would for any project. 

Which Coins Pump the Hardest because of FOMO?

Meme coins like Shiba Inu pump the highest as a result of hype and social media shilling leading to high FOMO. They also dump the hardest.

Is FOMO Trading Profitable or Dangerous?

FOMO trading is dangerous. Most traders that trade FOMO often end up losing over 70% of their portfolios. It is not advisable.