Don’t get trapped: How to manage FOMO in crypto investing

Picture this: you check crypto charts and notice that the coin you don’t own has begun to go up at a very quick pace. Right away, you start to get anxious as you believe that if you don’t buy now before the price skyrockets, you could miss out on what could be “the new Bitcoin”. Due to this, you act quickly and invest your money in that asset without taking the time to thoroughly investigate it, only to end up facing losses. This phenomenon affects many investors in the crypto market, and it is commonly known as FOMO.

FOMO isn’t something that affects only newcomers – even those who are more experienced can succumb to it, causing them to make badly timed trades. While staying on top of the crypto news today is indeed essential, too much information can be detrimental to your trades, especially if you don’t take the time to verify it beforehand.

Why does FOMO happen in the crypto market?

To manage FOMO effectively, it’s essential to first understand its origins. The reasons can look different for every investor, but they include the following:

Catching the next big opportunity. The idea of capitalizing on the next big opportunity has been sparked by the knowledge that market leaders like Ethereum and Bitcoin have turned early investors into crypto millionaires. As a result, many crypto enthusiasts enter the market because they don’t want to miss out on such a significant opportunity. Since they don’t think strategically and act out only based on emotions, they are left disappointed and face substantial losses. It’s never a good idea to invest in crypto because you are anxious that you may not catch the big opportunity – instead, the best approach is to think long-term and allow your gains to add up over time.
Avoiding substantial losses. Crypto FOMO is often regarded as being profit-oriented, with investors seeking a significant opportunity to profit. However, the opposite is also true: individuals can also experience it because they try hard to prevent major losses. For instance, the crash of the stablecoin pair TerraUSD and Luna is a relevant example here, as it led to losses of $50 billion three years ago.
Untested market. Compared to the stock market, the cryptocurrency market is still relatively new and largely unregulated. However, there’s an influx of individuals who are unfamiliar with it but are still eager to participate, and their strategy is mainly driven by the fear of missing out.
Consuming too much information. Information is a two-edged sword in the crypto market. On the one hand, it’s essential when it comes to making informed decisions and building a strategy in the crypto space, but on the other hand, it can drive FOMO, especially when investors have access to an overwhelming number of sources.

How can you prevent FOMO?

As you can see, FOMO is a common trap that’s easy to fall into, but the good news is that there are ways to avoid it:

Research, research, research

FOMO is driven by information you get from different channels, which is often unverified and biased. As an investor, one of your responsibilities is to do independent research. This should be the first step before making any move, because it will allow you to understand exactly how a coin works and its current situation. As a result, you will avoid making an irrational decision that may lead to a loss or liquidation.

Turn to reliable media outlets

While conducting research is definitely helpful when it comes to managing FOMO, consider also having a list of experts and trustworthy media sources you can rely on, as this will further inform your strategy. When buying or selling crypto, relying on these chosen influencers and media outlets can contribute to better decision-making, as you may learn additional information and get the clarity you need. To verify the legitimacy of media outlets, consider examining the site’s track record to determine its longevity and reputation. Also, search for information about the author to understand whether they are a real person and the articles they write relate to a specific area of knowledge. Evaluating the author’s motivation can be of great help when assessing the legitimacy of a site.

Build a guiding strategy

If you want to overcome FOMO, it’s essential to have a guiding principle, which essentially means having a checklist in place that will help you avoid making any rash decisions or jumping too rapidly on the market bandwagon. There will be nuances to your strategy, such as the real-world applications of the crypto assets of your choice, their tokenomics, and so on. Hence, it’s always good practice to employ a mix of technical and fundamental analysis, as it will protect you from poorly thought-out decisions.

Accept that you will not always win

Life has its ups and downs, and the same applies to the crypto world. As soon as you embrace this truth, you will have a more logical perspective and be more grounded when approaching the crypto market. It’s simply not possible to be in a profitable position all the time during your investing journey, and it’s essential to accept this, as it will allow you to handle occasional losses more effectively. Not even Bitcoin advocates are consistently on the winning side in this market, and the best thing you can do to mitigate losses is to develop a good strategy and stick to it.

Learn from mistakes

Learning from past mistakes is one of the best strategies to avoid anxiety from FOMO. Think back to when you’ve panic-sold your tokens because you’ve heard about a future dump somewhere in the news, only to see the price increase sharply soon after that. You found out the information wasn’t as significant as you thought it to be, or may not have even been correct, and regretted your decision to sell. In other instances, you may have made a decision that led to lost money, and that, too, was something you regretted. Once the mistakes have been made already, there are two options: you either dwell on them forever and beat yourself up for what you’ve done wrong (and in this case, you won’t be able to move any further), or, you being to exercise more caution, build discipline, and improve your strategy so you won’t find yourself repeating those mistakes. If you want to set yourself up for success in crypto investing, the latter is obviously the right approach.

The bottom line

FOMO is one of the most significant psychological traps in the world of cryptocurrency investing. If left unchecked, it can lead to unnecessary risks and substantial losses, so it’s essential to be mindful of it and ground your decisions in research and strategy. Remember: no single opportunity defines your long-term success, so cultivate discipline and patience, and stick to a strategy that aligns with your goals and vision.

Author Profile

Adam Regan

Deputy Editor

Features and account management. 3 years media experience. Previously covered features for online and print editions.

Email Adam@MarkMeets.com