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'Oh, gosh! the price just went down... I think I should sell, so I do not lose all my money!'
FUD! FUD!
Sounds familiar? Well, maybe...maybe not
INTRODUCTION
Short for Fear, Uncertainty, and Doubt, the word 'FUD' is a common slang in the cryptocurrency space that has been used by many people for years. Dating as far as back in the days of Bitcoin.
The meaning of this slang is quite literal. As it basically means spreading the impressions of Fear, Uncertainty, and doubt about a particular cryptocurrency. Most times, through rumours not based on fundamentals and understandings of chart movements via social media.
THE CAUSES OF FUD
FUD could usually tend to arise as a result of certain reasons. Some of these reasons include;
SOCIAL MEDIA RUMOURS
This is virtually one of the most common causes of Fear, Uncertainty, and Doubt. Most times on Social media (Like Twitter and Reddit), certain influential individuals could tend to spread FUD by carrying bad news about a particular cryptocurrency.
In the long run, Some of these rumours are usually based less on facts and proper understanding but, more on personal sentiments and those that give in are the ones that fall short.
SUDDEN CHART MOVEMENTS AND PRICE FALL
In the cases of Bear markets; when the prices of Bitcoin and certain digital assets begin to drop below regular levels, this can cause FUD for investors and traders alike. In response, they could usually decide to sell off their assets at lower price points as they are afraid they'll lose all their money.
By doing so, it leads to a loss in potential profit and slowing down of the market due to low trading volume.
UNFAVOURABLE GOVERNMENT REGULATIONS
While the basic concept of cryptocurrencies is based on the concept and idea of full decentralization and independent individual ownership, it is still important to note that most parts of the world we live in one way or the other, are regulated by governments and authorities.
This implies that some certain degree of regulations can be made concerning the adoption of cryptocurrencies. If these regulations do not favour people generally, it could cause certain market shifts which can stir up FUD.
THE EFFECT OF FUD
Overall, the effect of FUD always goes down to affecting the price of a cryptocurrency. When the charts begin to shift and the price begins to drop, most investors tend to pull out. They sell at a loss because they do not want to lose all the money they invested in a particular coin.
To the investors/ traders, FUD can cause a huge loss in profits due to buying high and selling low. But, for a cryptocurrency generally, if the price continues to drop, the market capitalization is also affected in the long run.
HOW TO DEAL WITH FUD
The main aim of dealing with FUD is just to ensure that as a trader or investor, you do not lose money! Here are two good steps to follow;
DO YOUR OWN RESEARCH REGULARLY
This is quite a necessary step which involves taking a study to properly understand a particular coin. Understanding of what drives the price of a coin at any particular point in time can most times help you make sure you do not just sell low and later regret doing so, or HODL and later regret not selling.
LEARN TO CONTROL YOUR EMOTIONS
A good skill that can help when dealing with cryptocurrencies is learning to put your emotions out of the way. The crypto space is a world of volatility and thus, you should expect the prices to fluctuate in real-time.
If a coin's chart looks good, and you know how to apply the basic fundamentals, just stick to your strategy and even though it might seem like the price is falling, just try and stay patient.
CLOSING THOUGHTS
On the contrary, while FUD could seem like a bad thing, sometimes knowing how to leverage FUD in some particular situations could come in handy;
According to Warren Buffett, 'The cryptocurrency market is a device for transferring money from the impatient to the patient'. For a coin like Bitcoin for example, when the prices begin to drop drastically for various certain reasons, buying the dips with the hope of selling high later could come as a good advantage.
Whichever way you choose, work on the strategy that best suits you!
Thank you for taking the time to read this, Kindly let me know what you think in the comments! :)
Let's connect!;
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