How To Deal With Crypto FOMO
Even within the larger, long-term trends known as bull and bear markets, the Bitcoin and
cryptocurrency markets have experienced several cycles of rise and fall since their
inception in 2009.Downturns can be stressful for seasoned traders and new investors and
lead to crypto FOMO.Nonetheless, the market has always recovered and grown significantly
following each drop.
FOMO in the cryptocurrency market occurs when an individual makes an illogical decision
to trade or invest in crypto. It depends on some information obtained without fully
verifying its source and authenticity.Bitcoin investors frequently make poor investment
decisions as a result of FOMO. It entails buying assets at their peak and selling them at their
lowest. FOMO (fear of missing out) in cryptocurrency can have far-reaching consequences,
including social isolation, anxiety, and, in extreme cases, despair.
How to deal with crypto FOMO
Below we'll go over several measures you may take when the market drops. It is to protect
your savings, resist the temptation to make rash decisions and trade based on your
emotions, and get a better night's rest.
1. When investing, think long-term
If you learn more about what's going on, you can ease the symptoms of FOMO. So, an
important lesson from one investor to another is that you need to be patient and think
long-term when you invest.
FOMO is often caused by people who want to make money quickly. But traders make
decisions about investments with a few months or years in mind, which is very different
from a passive investment that might be made for decades. Let's say you're considering
putting your money into a cryptocurrency or another hot stock. In that case, it's important
to ask yourself if you'd be happy to have it in your portfolio for a long time or if you're
buying it on a whim.
There's no harm in putting a small amount of money into an investment you think is worth
it before putting in more. Say the price of a cryptocurrency or stock is going through the
roof because of FOMO. Consider making small, regular investments in the asset class, like
once a month or every three months.
2. Don't let material success be your only motivation
Having money only to have money isn't rational. Why do you need this sum of money? What
do you intend to do? Whether for a major purchase or retirement, everyone saves and
invests for a reason.
Think about why you need the money before you invest in a strategy to make money. You
could also write out your objectives and read them over. In other words, fear of missing out
might make you participate in a risky venture. You could risk a modest amount of money on
such a gamble, but think about what would happen if a significant chunk of your investment
portfolio plummeted. Consider whether this is a good result, given your goals. Consider
passing if your savings are going toward a more immediate objective.
A significant price drop may be acceptable if the time horizon is sufficiently extended. It is
a common occurrence for each investment you make. A crucial part of risk management
and staying away from decisions based on fear of missing out is considering the possibility
of your assets failing and whether or not that fits your purpose.
3. Create a portfolio, not a list of quick wins.
Suppose you have several years or even decades until you need the money. In that case,
investing a portion of it in riskier but more lucrative ventures is wise. However, resist the
urge to compile a portfolio of "hot suggestions" you uncover on social networks or collect
from your colleagues.
Consider instead assembling a collection of high-caliber holdings around a sound investing
thesis for the long run. Consider successful and expanding companies riding the waves of
long-term, non-cyclical trends rather than the tides of fleeting fashion. If you already have a
stable portfolio, you may extend it by adding riskier growth stocks that could eventually
mature into a profitable enterprise.
4. Everyone has an agenda, and it is rarely in your best interests.
One last strategy for warding off FOMO: Before making a hasty decision to invest in
anything with high uncertainty, you should consider the source's legitimacy.It is
challenging, if not impossible, to ascertain the true intent of investors who brag about huge
gains online. Many crypto ventures launched in 2021, at the peak of the crypto mania,
turned out to be fraudulent "pump and dump" operations. You should still consider the
investment's credibility, even if it seems like a safe bet. It is possible that this investor has a
much higher tolerance for risk than you do or that they have goals that need a much longer
period than you have. Is it possible that they are outright fibbing about the benefits of a
certain investment?
Investing in fear of missing out can be combated by taking a break from online connections
where it's harder to tell who's being sincere. Think long and hard about a possible
investment, discuss it with trustworthy loved ones, and aim to make a rational (rather than
irrational) choice. Don't allow someone else's zeal to persuade you to undertake anything
you could come to regret; you know your own financial circumstances best.
How to build your crypto portfolio
Every crypto trader or investor will have their own opinion on what constitutes a
diversified holding. It's important to keep in mind, though, a few broad guidelines:
1. It would help if you allocated a certain percentage of your portfolio to high-risk assets, a
moderate-risk, and a low-risk allocation. Most of a portfolio's high-risk assets indicate that
it needs to be well-balanced. It might bring about greater returns but also risks causing
greater losses. The ideal proportions will depend on your risk tolerance, although a balance
is always preferable.
2. To increase your portfolio's liquidy, you should have some stablecoins. Many Defi systems
rely on stablecoins, allowing users to lock in profits or sell short.
3. If necessary, rebalance your investments. Due to the extreme volatility of the
cryptocurrency market, you need to adapt your strategies accordingly.
4. Investing surplus funds with a deliberate strategy will help you avoid putting too much
weight on anyone holding. Putting more money into a currency that's been performing well
is tempting. Consider where the funds might be set to greater use without letting greed get
in the way.
5. Learn on your own. This time-tested guidance is unrivaled. Remember that you are
responsible for your financial decisions and should not blindly follow the recommendations
of others.
6.Avoid risking more than you can afford to lose. If you're worried about your investments,
your portfolio's allocation is off. It is unreasonable to expect that your holdings will put you
at risk if anything catastrophic happens.
FAQs
1. What is a decent cryptocurrency portfolio?
Investing in hundreds of various initiatives is the simplest and arguably most effective
strategy to diversify a portfolio. Bitcoin, Solana, BNB, and XRP are examples of established
tokens in the portfolio. Investors could also consider investing cash in smaller-cap
cryptocurrencies with greater upside potential.
2. How to Deal with FOMO with Crypto?
Trading with patience is the key to avoiding FOMO. Investing time in research and
developing a well-thought-out approach will pay dividends in the long term. There's no
reason to hurry into a deal only to avoid missing out. When it comes to trading, remember
that patience is a virtue.
3. How do you deal with crypto stress?
To eliminate your crypto addiction and the associated tension and melancholy, uninstall any
crypto-related applications and avoid any news about digital currency. Alternatively,
restrict your investment in cryptocurrency and do not consider it your principal source of
income.
4. Will cryptocurrency ever recover?
Crypto will most likely reverse its current downward trend, but it is also possible that it
may go to zero. China's crypto restrictions might be the first of many as governments &
environmentalists battle crypto's huge power use.
5. Is another cryptocurrency meltdown on the way?
According to several analysts, another crypto winter is already underway. Because of the
market crash, layoffs, and the ongoing liquidity problem in the crypto business, analysts
predict that crypto prices will remain low again for the foreseeable future, as they did
between early 2018 and mid-2020.
Conclusion
Traders are always looking for the next big initial coin offering (ICO), fearing they will
miss out on massive rewards if they don't participate. Because of this, people frequently
make unwise choices that cost them money. The fact is that the market is always
experiencing some novelty or excitement. You will never succeed as a trader if you fear
missing out (FOMO).Maintaining market knowledge and adopting a systematic strategy
should be your primary goals. That way, you won't have to make rash judgments out of fear
of missing out. Several approaches might help you overcome the fear of missing out on
trading. We trust that you will find the preceding advice useful immediately.
THANK YOU