Cryptocurrencies have been trending for the past few years and are likely to keep on doing so in the future. What started as an idea to provide an alternative to the centralised fiat currencies has now become a mainstream exchange and store of value. Cryptocurrencies like Bitcoin and Ethereum have become usable for institutional investors and are replacing traditional stocks.
As cryptocurrencies and blockchain technology become mainstream, various projects come up. Think of any industry or problem on the earth, there is a possibility of a blockchain project looking to be the solution. There are already over 5,000 cryptocurrencies and the market is still expanding.
Like any other market, the cryptocurrency industry depends on demand and supply. The more demand a project gains, with a constant supply, the higher the value. This has seen the coins with more users like Bitcoin, Ethereum and Ripple command higher values. Other smaller projects like Dogecoin have also gained a massive following in a short time to grow by more than 800% within a few months.
That is where psychology in marketing and the fear of missing out (FOMO) comes into play.
Cryptocurrency marketers understand investors are always looking for the next big project with assured growth. Nobody wants to be left out making that mega-money from crypto growth. This has led to the rise of FOMO marketing.
Bobby Azarian, PhD, a cognitive neuroscientist, established that crypto marketers have weaponized FOMO in crypto marketing. He explains that marketers employ the natural cycle of fear and greed to promote certain interests.
The marketers in this cycle are engaged in psychological and information warfare as they look to reach the curious investors who are always looking for insightful opinions when making investment decisions. It then becomes ironic that information can hurt when investing in crypto.
Reasons for the spread of FOMO marketing in crypto
Compared to other investment options like traditional stocks, FOMO marketing is more rampant in cryptos. Here are some of the reasons for this;
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Lack of regulation
The crypto world is a decentralised system with no government or any other central control authority. Therefore, it has no clear ethical standards that have to be met in marketing and other engagements. Various tactics that would come with repercussions like jail terms or fines go on unabated in the crypto world. It is up to the investor to scrutinize the information they get regarding the various crypto investment options.
This will be the case until the governments have control over the crypto world. Some countries like the UK are already looking to control misleading advertisements. The UK Ad watchdog is intensifying crackdowns on crypto marketing to identify and remove irresponsible or misleading ads.
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Poor crypto knowledge
As a new investment option, not all crypto investors have proper crypto knowledge. Some of them only get into crypto investing following information on the market movements. They are only pursuing it as a way to make more money. A study by Oxford Risk found that 1 in 5 UK crypto investors have poor or non-existent crypto knowledge.
Without crypto knowledge, one can easily get manipulated into investing in a doomed project. Anyone with enough money to spend on big PR and other commercials can create false narratives which will sell among the uninformed investors.
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Greed
Generally, the FOMO marketing can seem justified given the projects are fighting for the same investors and resources. There is always the need to keep the market leadership and avoid losing ground to competitors. However, most of the cases are fueled by pure greed. Some crypto projects are created only to swindle unsuspecting investors. The creator promises the best solutions when they know they won’t deliver anything.
Greed also works on the part of investors. Any deal that sounds “too good to be true” in most cases is never worth it. However, the need for money clouds the judgment of many people. Some invest money even when they can’t afford to, hoping to make a quick profit and to recoup any potential losses fast. The outcome, however, is that they often lose more.
Tips to avoid FOMO when investing in crypto
FOMO impacts your investments. Anytime you invest without thinking about it or planning enough, increases your chances of losses. Therefore you are better off eliminating FOMO from all aspects of your trading. Some of the ways to avoid FOMO when trading include;
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Forget about the past
Anytime you approach a prospective investment, do it with its currency value and future in mind. While it’s alright to look into past performance for market movement analysis, do not use it as the basis for your investment.
Use the fundamental and technical analysis to establish the asset’s future movement. Most of these analyses are never wrong. No matter how much the value changes, it will at one point hit the targeted point. For example, most analyses had shown Bitcoin to hit $50,000 by mid-2021. If you invested a few years ago, you must have seen the coin dip to even the lows of $4,000. Ultimately, it still got to the projected value.
When you understand the prospects through the analyses you don’t have to worry about the normal market shifts.
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Recognise that loss is inevitable
One of the main fuels behind the crypto marketing FOMO is the need for assured returns. However, that is not how the crypto market operates. Almost every crypto investor, even the ardent ones have made losses at one point.
Also, the crypto market is never fully positive. Only consider investing what you can afford to lose. This allows you to keep calm no matter the market shift to avoid losing all your investments.
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Buy when everyone else is selling and sell when they are buying
The other way to keep safe from FOMO is by investing in the opposite trend of the crypto market. Buying the tokens when everyone is selling means you buy at low values. More people selling means less demand, hence low values.
After some time the market corrects and the value begins to go up. This means others will return to the market shooting up the value. By then you can sell at a profit when the others are buying.
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Set clear goals
There is another twist to buying crypto when the value goes down because it is not assured that it has to become profitable again. It all depends on the reason behind the falling value. To keep safe you need clear trading goals.
There are multiple crypto trading strategies to use depending on your expertise and expected profits. Depending on the strategy, stick to the position no matter the market movement. Do not rush to sell or buy more before the position’s maturity due to changes in the market. That’s why you have to analyse the market before taking any position.
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See the opportunities
Whenever looking at what FOMO means in crypto, it seems like buying in trend is disastrous, yet it can also be an opportune time to invest. However, ensure you are not putting in your money based on the promises from the ads. Instead, you believe after a clear analysis that the project is an opportunity.
The best way to understand the opportunity is by looking into the small peaks and valleys as the market fluctuates. You need top technical analysis skills to spot these small bumps and to be able to gain from them. The other option is to bet on when the market will go down.
FOMO marketing crypto FAQs
Should you seek help in managing crypto FOMO?
FOMO is a psychological trading aspect. That is why crypto marketers can exploit it and get you investing money when you didn’t plan to. In most cases, you might be struggling with more than just the investing part. Do not hesitate to look for help when you find it hard to deal with investing in crypto.
Investing in crypto should be a fun and fulfilling experience. However, when you become fearful and anxious about missing out then that’s an issue. Look for help before FOMO ruins your finances.
What should you do if you realise you invested through FOMO?
As you gain more crypto knowledge, you might realise you have invested in a project you had not even planned for. You don’t have to worry about it, instead, look for the corrective measures. The first is to abandon the market position if it’s still on. This will help you salvage some of your investments.
Remember not to be so hard on yourself. Be grateful that you have realised your mistake and are willing to correct it. For the next projects only invest after the necessary analysis.
What are some of the trading tactics to avoid FOMO?
There are various trading tips to help you avoid FOMO. The first option is to continuously put aside some money for crypto investing. By having a given amount to invest you won’t risk anything out of the ordinary. The other option is to diversify your investments to spread risks. Take up various cryptos to avoid losing all your money when the singular project goes down. You should also include traditional investments and stocks like gold and shares.