FOMO is an acronym that stands for the Fear of Missing Out. Everyone has felt FOMO at one time or another in their lives. For example, a student may have FOMO about a party when they know they need to study for an upcoming test. However, FOMO also exists in the financial markets. For the most part, FOMO in crypto deals with the urge to purchase a particular crypto asset before it moons in price by anywhere from 100% to 1000%.
FOMO can be especially potent in the crypto markets due to the wild price volatility that is in the space. Finding the right crypto asset at the right time could turn a $1,000 investment into a small fortune. Fear and greed tend to run the ups and downs of most financial markets over the short term. However, long-term investors know how to capitalize on other traders’ emotions. Once you understand how to buy bitcoin at the right times, it’s easier to avoid FOMO.
The best way to avoid FOMO is to have a plan when you first make an investment. Then stick to that plan by all means necessary. This is especially applicable to the crypto market where many longshot bets happen. In other words, the prices of most crypto assets expect to either go to zero or go up by ten, a hundred, or a thousand times their current price.
Once you’ve made your fundamental analysis on a particular crypto asset and see that its price could be much higher in five to ten years, it’s best to make your purchase and let the chips fall where they may. Of course, you can also implement a strategy of dollar-cost-averaging (DCA) instead of making an investment via a single purchase. This strategy will effectively average out your total accumulation cost over months or years. This is rather than sticking you with the price at a single point in time.
When you have a fundamental philosophy behind your original investment, it gives you an advantage over other traders. You’re able to avoid the emotions of short term price swings because you only worry about your long term objective. This means you are able to complete the powerful action an investor can take. Which is to buy when everyone else is fearfully selling. When the market is crashing but nothing has changed regarding your underlying investment thesis, it creates a buying opportunity. That said, most investors will likely want to stick with DCA rather than trying to time the perfect buying opportunities. When you try to time the market perfectly, you can end up letting your emotions get the best of you.
FOMO can also be ignoring the marketing hype that can be found behind many of the projects released these days. Most of the time, these projects will claim that a specific set of features found in their proprietary token will send it skyrocketing up the list of coins on sites like CoinMarketCap.com.
In many cases, these projects are effectively an already successful crypto asset network. Bitcoin or Ethereum, and tweaking a few features to include in their marketing materials. While they are touting these new features and the potential future price growth found in their token, they themselves will be dumping their early holdings of the token on the targets of the marketing materials.
Avoid Day Trading FOMO
One final tip for avoiding FOMO in the crypto markets is to completely avoid day trading. When you make a purchase on the crypto market for the first time it should be a situation where you’re willing to lock up that capital for a long period of time. When you get into games of trying to flip coins for short term profit, you can find yourself in a situation where the market turns against you for months or years at a time and you’re left holding the bag of a now nearly-worthless token of an abandon project.
At the end of the day, most people who are trying to figure out how to buy bitcoin without losing their hats should stick to five or ten year timeframes for their initial investments into the space. Most people are simply unable to control the impulses to buy or sell. When they are feeling fearful or greedy, so a long term investment thesis is a much safer bet. Many people who try to outsmart the market will quickly find out that the invisible hand knows much more . Much more about what’s going to happen in the future than they do.
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