Connect with us


« Back to Glossary Index

What Is FOMO?

Hesitancy usually translates to missed opportunities, especially when trading cryptocurrency. The fear usually felt by traders who are wary of being left behind and failing to milk whatever spike in the valuation of whatever coin is on a bullish run causes a lot of apprehension in the hearts of those who are trading the coins. The reverse is also true, in which rumors flying around during momentary dips cause many people to oversell.

Deeper Definition

Dr. Herman first mentioned the FOMO idea in an academic paper titled ‘The Journal of Brand Management,’ and the coinage of the acronym followed four years later when Patrick McGinnis published an opinion piece in 2004 on the American magazine titled ‘The Harbus.’ It is an offshoot of the idea on social media where people portray fanciful aspects of their lives for others to view as the norm in their lives. This then leads the watching public, who might not have enjoyed such luxuries, to question the state of their lives, leaving them hugely dissatisfied with the present state of their lives. Borrowing a cue from these, in financial and trading circles, fear of missing out works such that logical reasoning is relegated to the background, and the tendency to move with the herd and think with the heart over the head takes precedence. Such emotional decisions have tendencies to lead to the two extremes of over-and under-valuation of the traded commodities, stocks, or currencies.

It is quite difficult to ascertain the state of things because predicted all-time highs are sometimes much less than the final peak turns out to be and vice versa, but it is quite significant that once a large number of people initiate a trend, there are high chances for others to follow suit in large numbers.

FOMO Example

As more and more people get wind of the fact that a coin is being dumped, they usually join the dumping crew, and the same goes when a coin is thought to be pumping in its value as most members of the community enter the buying spree to try and get a piece of the action.

« Back to Glossary Index

Get the news right in your inbox