Since its initiation in 2009, the Bitcoin and cryptocurrency markets have experienced many cycles of growth and decline, even in a larger ongoing trend known as the bullish and bearish markets.
While it is true that recovery and significant growth have been seen following the downturn in all markets, the period of dip can be stressful and difficult to manage for experienced traders and even beginners.
But, the question is, what are FUD and FOMO? Let's go further!
What is FUD?
Fear, uncertainty, and Doubt.
The sentiment of the crypto community sometimes fluctuates like a yo-yo, which causes prices to go up and down.
FUD in Cryptocurrency is a psychological trick used to spread suspicions and fears that can lower the price of that particular coin.
Who will benefit from it? The people spreading FUD!
What is FOMO?
Fear of Missing Out (You can use this term in your everyday life).
However, when someone says FOMO in a crypto-related topic, they probably feel an urgent need to get involved in what everyone else is doing, i.e. buying a particular cryptocurrency when they think its price is going up.
Nonetheless, this article provides some tips to follow during market downturns to maintain portfolio value, avoid emotional trading, and reduce sleep deprivation.
1. Set Clear Goals, Diversify, And Act Only Within Your Means
No matter how confident you are in a particular asset, don't invest more than you can afford to lose. The last thing everyone wants is to get caught up in an emotional roller coaster and wait for positive price action while portfolio prices are slowly declining.
It is often said that the crypto never sleeps. The crypto market is known for its volatility, and to counter this, crypto investors need to define their trading strategies and, if possible, entrance and exit points.
Investors can consider fixed strategies such as the dollar cost averaging method (the process of buying and selling small quantities regularly). This will help prevent cryptocurrency buyers from trading their emotions completely or appearing on charts 24/7.
2. Knowledge Is Another Weapon In The Fight Against FUD
Another thing that can help eliminate these FUD and FOMO tactics is knowledge. The more you learn about Bitcoin, the economy, and the financial markets, the more you will be able to make decisions using only logical thinking. You will even be less likely to react to pressure from others. FUD and FOMO tactics can even make you laugh.
Once you understand the liberation power of Bitcoin, you will be a Bitcoin HODLer. You will understand that Bitcoin will be an accumulation game for years to come. Therefore, the more BTC you accumulate, the better your future will be in terms of money.
3. Get Ready To Ride Out The Dip Or Make Profits
One of the surest ways to avoid cryptocurrency fluctuations and protect yourself in times of market downturn is to turn some of your fluctuating cryptocurrency holdings into more stable assets. This is useful when investors need to "balance", mitigate risk and actively manage their portfolios and stress levels in the bull market of cryptocurrencies.
But, keep in mind that selling all at once, called "capitulation", can easily cause crypto holders to lose out if the market suddenly recovers. That's why it's so important to know what level of profits and losses you're convenient with before you're forced to decide under pressure.
4. HODLing And Long-Term Thinking
The maxim "It's not a loss until you sell it" is only partially true, but it still has weight. If the value of an asset decline after it is purchased, the so-called unrealized loss will not be realized until it sells at a lower price than the purchase price.
HODLing cryptocurrencies for long periods of time has benefits. For example, HODLing for one year or longer may be more favorable than selling in the short term.
5. See Opportunities
Even with the crypto market going down, there are opportunities if you know where to look. Where others see a dark and cold crypto winter, eager investors see a new opportunity to discount their favorite assets and profit.
“Buying the dip” is a common way for traders who feel constrained in price from previous gains to enter the market or increase their position.
Even in a downtrend, there will always be small peaks and troughs as the market moves. Traders who have honed their technical analysis skills can benefit here, by using that knowledge to predict these short-term moves and capitalizing on them by buying the short term lows and selling high.
FUD and FOMO tactics are as old as the times. Therefore, it makes sense that they are used in the Bitcoin world. By constantly learning and applying the tips above, you will be permanently immunized from these tactics.
This will allow you to adopt the best possible strategy in the Bitcoin world, that no matter what, you will be a Bitcoin HODLer.
As you can see, you've got a weapon to fight the FUD and FOMO inside of you. Now it’s up to you to use them.