Many terms can describe the situations and conditions of the owners and users of crypto assets.
Among the terms that are often heard in the trading community and the world of crypto asset investment and which need to be known are FUD and FOMO (Fear Of Missing Out).
The term FUD is often used when someone gives a bad opinion that can affect the balance of the crypto market price.
So, to learn more about what FUD means and how to avoid FUD, let’s look at the following review!
What is FUD?
FUD stands for Fear, Uncertainty, and Doubt. This term is used to describe a marketing tactic or strategy.
The goal of this strategy is usually to influence someone’s decision not to buy a particular product or investment or even to sell it if they already own it.
FUD, in general, is often used in the crypto industry and financial markets, where there is a lot of tension and fluctuation in crypto prices that can influence one’s investment decisions.
The difference between FUD vs. Fomo
FUD and FOMO are almost similar terms because both can influence emotional and fear-based factors for traders/investors in the crypto market.
However, these two terms are, of course, different. The difference is FUD is an opinion that can emotionally affect traders/investors.
Because of this, they will also doubt, even change their minds, regarding strategies and plans in investing in crypto.
On the other hand, FOMO can be interpreted as people/parties influenced by one’s opinion regarding crypto market conditions or other matters related to trading/investment.
FOMO will usually be felt by market participants when big things happen or when there are opinions about crypto market conditions.
How FUDs Work
So, how does FUD work? As a psychology of strategy, FUD players will initially charge disinformation about certain crypto assets.
Take, for example, FUD perpetrators who will convey false information that irresponsible parties have hacked a crypto asset platform.
In this case, FUD perpetrators will invite one person to make a false statement regarding their mysteriously disappearing assets.
This fake news can make many investors panic and eventually sell their assets.
If the asset is sold in bulk, the price will certainly decrease.
Therefore, FUD players are the first to benefit because they will immediately buy the asset at a low price.
At the very least, FUD players can make money with the price of a crypto asset falling in the following two ways, namely:
First, the perpetrator has entered a short position, borrowed an asset, and sold it on the market. If the asset’s price falls, the perpetrator can repurchase it at a low price to cover the loan.
Second, actors know an asset has good potential, but the current market price is expensive. By delivering bad news and losing prices, these FUD players buy the assets at low prices.
What are the effects of FUD? By spreading concern over an asset, aka FUD, psychologically, many parties, including traders and investors, will be affected.
As a result, they will sell their assets because they are afraid of the price of their assets.
In the end, FUD will make the price of an asset fall. The reason is an excessive concern which ultimately leads to increased selling pressure.
Analysis in Facing FUD
Others and the media often use someone emotionally to make that person interested in the news he presents.
The reason is that when humans look at it emotionally, their decisions will usually be hasty and, in the end, result in losses.
Therefore, when receiving news that has the potential to cause FUD, each individual should start analyzing that information logically.
You can ask yourself about the news you receive to think more clearly.
In this case, ask yourself about the truth of the news, the possibility that it will take place soon, the truth that it will have a significant impact, and a series of other questions that prompt the birth action to find facts and analyze the information.
Biggest FUD Moment
What are some of the most significant FUD moments ever? Here are some of them, namely as follows:
1. The birth of Facebook’s crypto assets
One of the most significant FUD moments ever in the crypto world was the launch of Libra as Facebook’s crypto asset.
The fear he did it started with rumors that the owner of Facebook, Mark Zuckerberg, was preparing to release his crypto assets.
After the news hit the media, there was a huge increase in interest in crypto assets.
The reason is that so many people believe that the presence of this coin can answer the need to adopt crypto assets in general.
However, amid the many parties enthusiastic about the development of this Facebook coin, not a few are still skeptical and fearful of the privacy of the coin, which later changed its name to “Diem.”
Accusations of privacy resulted in the political world heating up on Facebook.
Reflecting on the company’s history of dealing with similar allegations, this led to the crypto space becoming one of the biggest FUD moments ever.
2. Donald Trump’s tweet regarding the use of crypto assets
After the Libra controversy from Facebook, Donald Trump, President of the United States, also sparked FUD.
This happened after Trump tweeted aliases about Bitcoin, Facebook Libra, and crypto in general, and he pointed out that they were all being used for illicit crimes.
Even though it is considered a big thing that the President of the United States at that time spoke out about the use of bitcoin and crypto assets, it is very unfortunate that he expressed negative opinions regarding the use of crypto assets.
When Trump expressed his opinion, the moment almost coincided with Bitcoin’s rising price.
3. Launch Bakkt
The launch of Bakkt was also the biggest FUD moment for the crypto world.
Created by Nasdaq, Bakkt itself is a crypto asset futures trading platform.
This platform became a hot issue when it was first announced in 2018.
At that time, many crypto market participants predicted that there would be a sudden influx of institutional investors which would be enough to make Bitcoin jumpstart a new bullish run.
However, on Bakkt days, the price of Bitcoin (BTC) dropped to nearly $2,000 in one day.
The plunge in the BTC price shows that even the biggest FOMO moments can quickly turn into FUD simultaneously.
4. Predictions of the Chinese government regarding blockchain
Another of the biggest FUD moments was when the President of the People’s Republic of China (PRC), Xi Jinping, expressed his support for blockchain.
It happened when there was confirmation that Bitcoin’s uptrend was over as the big-cap crypto asset had fallen to its recent lows.
However, Xi Jinping told his citizens that the country must remain at the forefront to develop the future of emerging blockchain technology.
So, the crypto whales also see this as a good opportunity to make a splash in the Bitcoin market.
Not long after, FOMO occurred due to support from the PRC government for the blockchain and crypto assets, so the prices of crypto assets continued to soar.
If you want to enter the world of trading, including crypto, prospective traders must be equipped with qualified fundamental analysis knowledge.
This one analysis will be the basis for traders to analyze things that can affect the sentiment of market participants and the balance of supply and demand.
In this case, traders must first understand the key variables of the type of crypto asset to understand the market and trade safely.
For example, traders can understand the idea behind the creation of crypto, its functions/uses, who is the target/target market, and the prospects for future demand.
Here, traders should start reading the whitepaper of a coin/crypto asset, digging for information about the characteristics of the coin, the developer, the purpose of its development, and where the coin is distributed.
If the trader has done a fundamental analysis, then the news about FUD spreaders will only become rumors that don’t need to be ignored.
Traders will even be able to find the right time to buy a crypto asset and determine the best type of coin for the medium and long term.
Therefore, to avoid getting mired in FUD situations and moments, you should start studying fundamental analysis and other important things related to trading.
Besides that, to avoid falling into the same hole, remember to also learn from examples of FUD cases that have existed.
In conclusion, being an acronym for Fear, Uncertainty, and Doubt, FUD is a term used to describe a marketing tactic/strategy.
This strategy usually aims to influence someone’s decision not to buy a particular product or investment or sell it if they already have it.
So far, some of the most significant FUD moments ever have been:
- The birth of Facebook’s crypto asset, namely Libra (now renamed Diem).
- Donald Trump’s tweet as President of the United States regarding the use of crypto assets,
- The launch of Bakkt by Nasdaq.
- The prediction of the Chinese government regarding blockchain.
So, that was the complete discussion about FUD that you need to know.
Next, ensure you have applied fundamental analysis followed by proper risk management, such as diversifying investments and setting loss limits.
This will help you to make smarter and more informed crypto investment decisions.
Let’s trade crypto right now at INDODAX!