Fear of Missing Out (FOMO) Can Seriously Harm Your Crypto Trading

The unexpected rise of BTC value, and consequently, other cryptocurrencies, has led to commotions in the sentiment among crypto holders. The notorious Fear Of Missing Out, a.k.a FOMO, seems to be kicking in slowly but steadily. Experienced investors, nevertheless, know very well that FOMO is something you should avoid at all costs. In fact, it could be your greatest nemesis when it comes to trading or investing. But why is this so?

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fear of missing out

Illustration: Milica Mijajlovic

What is FOMO?

The fear of missing out, popularly known as FOMO, may be defined as the feeling of anxiety that somewhere, something exciting might be happening. Also, it could be the sense that others could be having more fun or living a more quality life than you. However, it’s not just the perception that others are doing better than you. It’s the impression that you’re actually missing out on something essential others are going through.

The FOMO phenomenon is becoming remarkably widespread, partly owing to social media. It includes a deep sense of jealousy or envy, thus affecting one’s self-esteem. Consequently, it can lead to experiencing considerable stress. Anyone can fall victim to FOMO, however, some people may be at greater risk than others.

The impression that you may be missing out on a great time has supposedly been present for centuries. Yet, it was only during a few past decades that it has been researched. The study began in 1996, when Dr. Dan Herman, a marketing strategist, came up with the term “fear of missing out.”

Given the fact that social media is all about bragging, its rise has accelerated FOMO in a few ways. All those photos of magnificent tourist destinations, fancy parties that you haven’t attended, expensive vehicles or vessels, spotless outfits and makeup lead to your realizing all the things you’re lacking. Photo by photo, post by post, and you end up comparing yourself with the highlights of other people’s life. Consequently, you start sinking into depression, believing that you’re a loser since you’re missing out on all those perfect events.

Related terms  

There are other concepts that have appeared inspired by the FOMO phenomenon:

  • Fear of Better Options (FOBO), referring to an impression that you may be missing out better alternatives;
  • Mystery of Missing Out (MOMO), pertaining to the fear that you might be missing out but without a clue what you’re missing;
  • Reality of Missing Out (ROMO), concerning the awareness that you’re not missing out on anything;
  • Fear of Joining In (FOJI), referring to the fear of sharing on social media but failing to get a response;
  • Joy of Missing Out (JOMO), regarding positive feelings about missing out and unplugging from social media.

Who is affected most by FOMO?

As already mentioned, anyone can fall prey to FOMO, regardless of age, education, or status. In its study, the Psychiatry Research journal has discovered that FOMO is (directly) associated with the increased smartphone and social media consumption. The research has also indicated that this association isn’t linked to age or gender. More precisely, the study showed that smartphone usage was connected to fearing both positive and negative evaluations, along with the negative effects on one’s mood.

Another research published in the Computers in Human Behavior journal has found out that it’s not only one trend that is related to FOMO but several of them. In essence, however, FOMO was discovered to be related to a lower sense of having one’s needs satisfied, along with a poor sense of satisfaction in life in general.

The study also associates FOMO with high social media engagement. In fact, the study argues that FOMO is connected to the urge to engage in social media, thus increasing the engagement. As a result, both FOMO and inadequate social media presence might add to an adverse, self-perpetuating cycle.  

Though individuals of all ages can experience FOMO, adolescents and young people might be affected most. Seeing their friends’ and peers’ posts on social media may lead to comparison and experiencing strong fear of missing out on what their peers are going through.

According to the Psychiatry Research journal study, FOMO can evoke depression, anxiety, and low self-esteem. The peer pressure caused by FOMO may further lead to risky behavior in teens that they would otherwise dodge. Since the teenage brain is still in the developing phase, they might immerse in risky actions without being aware of potential consequences.

FOMO in Crypto Trading

In crypto trading and investing FOMO refers to missing out on an opportunity to get excessively rich by buying then selling assets at the right time. Many naive crypto-curious individuals believe that investing in cryptocurrency is a synonym for being loaded. In their view, holding Bitcoin or other assets is a shortcut to obtaining a penthouse, yacht and a Lambo.

The reality, however, is the polar opposite. FOMO is a financial advisor you should never ever consult if you don’t want to make your life miserable and end up living on Skid Row. Following FOMO disguised as your intuition may entice you to act irrationally and thus commit grave mistakes.

In addition to panic-selling crypto when prices start dropping or purchasing them when they begin to recover, FOMO can poison minds of inexperienced traders and make them fall prey to scammers. When it comes to investing not only in crypto but also in any other security, it is never an act of emotions. Otherwise, you may risk losing a fortune.

Why is FOMO a problem in crypto trading?

Fear of missing out has undoubtedly become a significant force in the crypto world. There are several reasons to blame for it.

To begin with, a crypto market testifies individuals getting filthy rich only because they recognized an opportunity to purchase the right coin at an early stage and grabbed it. The greatest success stories are mostly concerned with market leaders Bitcoin (BTC) and Ethereum (ETH).

Everyone is now aware of the fact that blockchain technology and cryptocurrencies have huge potential. Even though the majority have missed the BTC and ETH trains, a chance to invest in a coin that could grow within a short period of time may pop out. Yet, this is a double-edged sword.

Whenever a new cryptocurrency appears, people may be beguiled and think they can earn a fortune by investing in it. They are so enthusiastic that they simply can’t help investing, even if they know very few details about a new deal. Such people eventually end up being scammed, which doesn’t stop them from participating in other fraud. They are typically uneducated and inexperienced in crypto trading. Instead, they’re just following dreams about getting a Lambo or Bugatti. As a consequence, they are willing to spend all their savings, which makes them hapless victims to scammers.  

It is a truth universally acknowledged that the crypto market is pretty young and therefore unstable. The value of many coins mainly depends on the sentiment, i.e., people’s faith in their potential. Unexpected changes in the market mood can spur the price to grow or decline significantly, creating what people may perceive as a lush earning opportunity.

Indeed, hitting the right time to buy or sell crypto might earn you impressive gains. For this reasons, FOMO is what has been driving people to trade and invest in crypto. Modern digital gold seekers could be compared to miners during the gold rush in the Wild West. The rush is still present, except that we now have traders armed with their wallets instead of diggers with pick-axes and guns.

How to recognize FOMO

FOMO traders typically think alike. They tend to follow the crowd and are driven by greed and assumptions, similarly to gold diggers of the Wild West­.

Some of the statements FOMO traders keep repeating to themselves include:

  • Many are purchasing the coin, so there must be something about it. It’s impossible they are all wrong.
  • Why not try? I could make a lot of money!
  • I should’ve known it would grow!
  • All of those people who are buying, they must know something I don’t.
  • I would never forgive myself for missing such a huge opportunity if the price jumps.

Of course, don’t take these statements verbatim, as not all people tend to say this. However, they do feel and think alike.

How to overcome FOMO in crypto trading

The very first step towards solving the problem is identifying it. If you’ve been wasting your life savings hoping that crypto trading will help you get from rags to riches shortly, this might be the perfect moment to reevaluate your hopes. The following tips may help you not only keep your money safe but also restore much-needed peace of mind.

Unplug

The most straightforward way to dump or reduce FOMO is to disconnect. If you’ve been spending too much time analyzing crypto charts hoping prices will skyrocket, chances are that you need a mental detox desperately.

Try closing all the charts that you’ve been monitoring and stepping aside from all crypto-related social media profiles for a while. Remind yourself that there’s more to life than trading and making money to secure your future. Focus on the present moment: do yoga or meditate, play games, or go road-tripping. Slowing down can help you get over anxiety urging you to act urgently and commit mistakes.

Losing is just a part of the game

Everyone has missed a great opportunity at some point, and there’s nothing shameful or tragic in that. Losing is just a part of the game (or trading in this case), and it’s something that inexperienced traders need to go through.

Don’t be deceived by huge success stories that veteran traders share. They have all lost money once, though they prefer not to share it. The crypto market is extremely volatile and unpredictable, so loses are inevitable. To minimize them, invest wisely, stick to your strategies, and don’t let yourself be overwhelmed with emotions.

Do your due diligence

Mesmerized by the stories of Bitcoin and Ethereum, many inexperienced traders tend to daydream about becoming rich. To them, every coin advertised as a new Bitcoin seems to be a once-in-a-lifetime opportunity to gain wealth.

What you need is to be a bit rational and pragmatic here, as reality is much harsher. If you check out statistics, you’ll realize that there have emerged hundreds of shitcoins per every BTC and ETH. Each of those shitcoins has pretended to be ingenious, revolutionary, or innovative to draw FOMO-driven investors and abuse their investments.

Your guts might be misleading you

Intuition could be of great help when meeting new people or choosing a partner. In crypto trading, however, it’s critical that you listen to your brain only. Whenever your gut is telling you that you should buy this and that coin, tell it to shut up.  Our subconscious wants the best for us, that’s for sure, but sometimes it may hijack our sanity and compel us to make unwise decisions.

Explore FOMO scams

One of the most widespread scams making use of FOMO is the so-called pump-and-dump scheme. In essence, a group behind a scheme makes the price skyrocket by asking influential people to advertise it. FOMO traders get attracted, believing they have “the next big thing.” The moment price hits a specific mark, the scammers start selling the coin and making profit at the expense of other participants.

What ifs“ won’t take you anywhere

Many FOMO victims shudder at missing the great big thing, not being able to forgive themselves for not purchasing BTC or ETH at a low price. Regretting their failure to seize the opportunity and become rich, they are lurking to fix that mistake by spotting and grabbing a new chance.

To stop such intrusive thoughts, remind yourself that there is no point in contemplating on what might have happened. It’s worth noting that, among those who made fortune by investing in BTC, only few were ordinary people. The majority had finance, fintech, or programming background, which let them recognize the power of cryptocurrency, a concept too abstract for average users.

Even if you grabbed BTC in its early days, chances are that you would have sold it when it first reached a somewhat higher price. Hence, stop asking yourself “what if” as you can’t change the past. Rather, start educating yourself – the more you know about cryptocurrencies, the faster you’ll be able to spot coins with real value.

Analyze your mistakes

Mistakes are undoubtedly the best teachers we will ever have. Each FOMO trader has a history of failures they prefer not to remember. Revise your trading history and realize that FOMO is to blame for your losing instead of earning money. Just like any other deeply-rooted and potentially irrational fear, it urges us to act fast without thinking twice.

To get rid of FOMO once and for all, it’s recommended that you learn about the crypto industry and market and research, its advantages and disadvantages, as well as potential pitfalls. You should also be aware of how your guts and instincts may deceive you when things become complex.

"Ever tried. Ever failed. Never mind. Try again. Fail better."

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