What Exactly is FUD in Cryptocurrency and How To Deal With It￼
Investing in any business can lead to a lot of mixed emotions. According to some crypto investors, FUD should not worry people that much. But is this statement right?
First things first, what is FUD? It is fear, uncertainty, and doubt. Which is the complete opposite of FOMO (fear of missing out). FUD is commonly used by crypto enthusiasts to criticize investors for being skeptical.
Although the idea has some truth in it, it is not all accurate. Yes, investing in a business should not be guided by your feelings but an investor should always be ready to make changes if need be. That is the secret to becoming a successful investor.
When is the Term FUD Used?
Now that we have understood the meaning of FUD, let’s look at how it is used. In most cases, it is used in forums dealing with investments and particularly investments that are unstable such as cryptocurrencies.
Early this year, a user of Reddit’s Cryptocurrency forum used the term FUD to pour out their frustrations as a result of the market prices falling. The user was tired of the same excuses given over the years. ‘Who else is ignoring the FUD and feeling bullish on crypto for 2022’ was the exact statement of the user.
What you Should do When You Are In FUD Mode
As an investor, it is perfectly normal to have mixed feelings, especially investing in cryptocurrencies where the market has volatile tendencies. Here are a few things to consider to ensure that FUD does not impact your judgment.
Fear: Fear can make anyone rush into making a decision that can negatively affect your investment.
Under fear, there are two scenarios. Investors selling their investments due to the falling prices. Their idea is to prevent further losses. This has proven time and again not to be the best decision.
Cryptocurrencies are unpredictable. You might sell your investment to prevent losses and the market later begins climbing. Another example is someone purchasing an investment due to the fear of missing out.
How to deal with fear
Hire a financial advisor to assist you in making financial decisions based on your portfolio. A long-term investor that does not require cash withdrawals is in a better position to deal with short-term challenges.
Also, since investing in any business can be terrifying, look for ways that can assist you in case there are losses. Consider a healthy emergency fund.
Uncertainty: If you are an investor, by now you should have figured out that there are risks involved in investing in any business. It is how you deal with and manage the risks that matter.
How to deal with uncertainty
Risks in a business are not something you can avoid. The best option is to learn how to handle the risks. Taking an example of a bond, it has a lower risk compared to the S&P 500 index fund that comprises stocks from many companies. Bonds also have lower returns.
On the other hand, cryptocurrencies and individual stocks have more risks and the markets are extremely volatile.
When dealing with risk, it is important to consider some factors like your age and goals. That way, you can plan according to your resilience to handle risk.
It is not a bad thing to go through a new idea you may have. The problem comes in when skepticism affects your decision. Cryptocurrency’s future is unpredictable. So, a decrease in the value of an investment does not automatically guarantee its failure.
How to deal with Doubt
If you have invested in a business, you expect it to grow and bring returns. It can be frustrating if after some time you do not see rewards. If this is the case, go back to the drawing board, evaluate the plan you made before getting into the venture, and if the plan does not have a reason anymore, don’t be afraid to come up with another plan.
Many people always assume that if prices drop what will follow will be an automatic boom which is not always the case.
That said, if you feel you have a better plan that you can execute, do not be ashamed to change your philosophy.
Finally, there is a popular trend that has emerged in the crypto world where investors buy and hold their crypto for long-term purposes.