HODL FOMO Versus Speculative FOMO In The Crypto Race

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    By Partner EditorialDec 7, 2020, 1:54 pm898 pts

    Nowadays, we always feel like we are short on the important information. This is due to the mountain data created every day in every industry. Hence, we are constantly trying our best to keep up with the trends. And at the same time, we do not want to fork away from the industry we belong to.

    The urge to be at the top influencer in the information industry is stronger than anything. These urges create a FOMO (Fear Of Missing Out) effect, which manifests itself while we try to learn and know everything.

    What Is FOMO?

    The term FOMO has become a buzz word in the marketing industry. It stands for "Fear Of Missing Out." The name itself explains the concept behind the word. Here it means that who is affected by FOMO has a fear of missing out on something. That something can be anything, opportunity, trade, decision, assets, anything.

    If we can track the market, we will find that this FOMO effect has been in the market for quite a while. The FOMO effect is driven by the addiction of the updates and data consumption. Researchers have claimed that this FOMO affects the behavior of the person and holds high addiction potential.

    What Influence Does FOMO Affect Have On Bitcoin?

    Bitcoin is an asset whose prices are regulated by the market demand and supply. If the supply is less and demand is more, you will find Bitcoin's price soaring high and vice versa. Now Let's assume that the market participants constantly watch the Bitcoin market. Whenever there is a slight change in the trade graph, they pick up those changes and interpret their trading decision.

    In the trade market, every individual tries to find an optimal entry point, so if too many traders enter the market simultaneously, this will be considered an increase in demand. Hence, we can see a high surge in Bitcoin's price evaluation.

    Now that the price is higher, more investors and traders will find an entry point. This effect is what we call the FOMO effect. People fear that if they do not enter the market, they might miss out on something.

    FOMO Effect On Bitcoin HODL

    FOMO effect the long term investment as well. When you are in the market looking for an opportunity to buy Bitcoin at the most reasonable price, you would see all the charts and graphs to make your buying decision.

    Let's say, for instance, you are at the trading platforms and observing the trade market looking for an optimal price to buy Bitcoin. You find that the Price of Bitcoin is dropping. This will create a FOMO effect for you where you will be forced to think that this is the least price you can pay for Bitcoin. And you make a purchase.

    The FOMO effect for the market is a good sign as it encourages people to buy and hold the assets for a long time. It also makes the market stable and bore high returns.

    FOMO Effect On Bitcoin Speculation

    Speculative FOMO for the Bitcoin market is just the opposite of the HODL FOMO. Speculative FOMO keeps the traders and investors on the toes with every single change in the Bitcoin Trade market. With every single change, with every price hike, with every price drop, there is a FOMO effect. It makes the investors buy and sell their crypto assets with the fear of missing out on the best opportunities.

    This Practice is one of the prime examples of why we see so many changes every second in the Bitcoin trade market. Let's understand with an example.

    Suppose you are in the Bitcoin Trade market and are looking for an opportunity to sell you a $10 asset at the best possible. You start observing the market. For the past couple of hours, the price has constantly been fluctuating at around $10. Now you have become less and want to sell your assets as soon as possible.

    This is the moment you see the price moving up to $12, this will create a FOMO effect, and you will sell your asset thinking that if you miss out on this opportunity, you will no longer be able to make a 20% profit.

    The Bottom Line

    FOMO has been in the market for quite a while and plays an important role while making trades. The fluctuation in the price we see is mostly due to the FOMO effect. If you are looking for an opportunity to take advantage of this whole FOMO thing, you might have cfds trader.


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