Decoding FUD And Its Impact On Crypto Users

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FUD is an acronym that stands for Fear, Uncer­tain­ty, and Doubt

When the mar­ket dis­cuss­es FUD, it means a neg­a­tive event has occurred that seems to be sus­pi­cious­ly timed with large Bit­coin price move­ments that have an impact on the larg­er cryp­to market

Cryp­to FUD can prompt hasty judg­ments such as con­cerns about oth­er finan­cial markets

FUD is an acronym that stands for Fear, Uncer­tain­ty, and Doubt. When the mar­ket dis­cuss­es the term FUD, it means that there has been some type of neg­a­tive event that seems to be sus­pi­cious­ly timed with large Bit­coin price move­ments that have a large impact on the larg­er cryp­to mar­ket.

The source of the FUD is con­stant­ly chang­ing, but the impact is often the same: low­er prices and a mar­ket won­der­ing what hap­pened and look­ing for some­thing to point the fin­ger at. 

Inter­est­ing­ly, some of the most suc­cess­ful investors in finan­cial his­to­ry believe that FUD itself can be pre­dict­ed through tech­ni­cal analy­sis and that the news cycle is part of the over­all cycle of human behav­iour that the study of price pat­terns actu­al­ly examines.

Impact Of FUD On Crypto Users

How­ev­er, on a per­son­al lev­el, cryp­to FUD can prompt hasty judg­ments such as con­cerns about oth­er finan­cial mar­kets. For exam­ple, you may be forced to sell your hold­ings if news comes out at the right time that casts doubt on the via­bil­i­ty of cryp­tocur­ren­cy mining.

The dan­ger of FUD in any mar­ket is this: FUD can influ­ence peo­ple to make finan­cial­ly risky deci­sions, whether it is used as a mar­ket­ing strat­e­gy or sim­ply the result of emo­tion­al reac­tions to news arti­cles that lack prop­er context.

This can mean doing any­thing from elect­ing a polit­i­cal can­di­date who doesn’t stand for your inter­ests to liq­ui­dat­ing your retire­ment funds at a loss or destroy­ing your cryp­tocur­ren­cies before they have a chance to mature.

The most ardent pro­po­nents of cryp­tocur­ren­cies often sup­port push­ing FUD and “HODLing ” or hold­ing onto your hold­ings, even when prices are falling. Unfor­tu­nate­ly, the lev­el of dan­ger you are will­ing to take can make some­one even more afraid. Advice to HODL involves as much risk as advice to sell in uncer­tain times, as cryp­tocur­ren­cy mar­kets are still very new and lack his­tor­i­cal returns to sup­port expec­ta­tions of a recovery.

Examples Of FUD In Crypto Markets

Some forms of FUD appear so often that they deserve men­tion in this arti­cle. Let’s briefly intro­duce some of them, which will help you spot them from afar while brows­ing cryp­to­graph­ic news.

Bitcoin Will Die

This type of mis­in­for­ma­tion, usu­al­ly spread by big-name scep­tics like Nouriel Roubi­ni or Peter Schiff, attempts to paint Bit­coin as a fad that will lose its appeal at some point. As a result, the val­ue of the orig­i­nal cryp­tocur­ren­cy will reach zero and every­one involved will feel the finan­cial consequences. 

How­ev­er, his­to­ry has shown us that this is just a dream. More­over, with the grow­ing insti­tu­tion­al inter­est in Bit­coin and cryp­tocur­ren­cies, it is safe to say that this will nev­er hap­pen. 99Bitcoins even mapped all of these BTC obit­u­ar­ies on their web­site with over 400 occur­rences and counting.

China (Or Any Other Country) Bans Cryptocurrencies

Those who fol­low cryp­tocur­ren­cy news have seen this news sev­er­al times over the years. In every bull­ish cycle, the Chi­nese gov­ern­ment announces some form of cryp­tocur­ren­cy ban, and this hap­pened in 2013, 2017, and 2021. 

It is worth not­ing that in nei­ther case did the ban have a long-term impact. And it also makes you won­der, how many times can you ban the same thing again?

Regulatory Woes

As we men­tioned before, cryp­tocur­ren­cies are large­ly unreg­u­lat­ed. Gov­ern­ments around the world are push­ing for some kind of reg­u­la­tion, and that in itself is not a bad thing. Ulti­mate­ly, this will make the cryp­to ecosys­tem a safer place for investors. Even if it takes away some of the free­dom we are used to.

Over­all you can see the pat­tern here. FUD is usu­al­ly irrel­e­vant infor­ma­tion that is out of pro­por­tion to cause pan­ic in the market.

How To Detect FUD?

As you may have already noticed, FUD aims to dis­cred­it the blockchain space and the cryp­tocur­ren­cy mar­ket as a whole. 

For exam­ple, the media will present Bit­coin as an elab­o­rate scam or Ponzi scheme with­out pro­vid­ing any basis for these find­ings. Any­one who has looked into Bitcoin’s proof of work before knows imme­di­ate­ly that this is impos­si­ble. How­ev­er, this may ring true for the main­stream investor. It would pre­vent them from accept­ing cryp­tocur­ren­cies as a medi­um of exchange or an invest­ment tool.

So how do you bypass fake news and make up your own mind about upcom­ing events? There are sev­er­al reli­able ways to do this, including:

  • Do your own research. Don’t fall for pro-or-anti-cryp­to pro­pa­gan­da. Before falling for FUD, try to assess whether the claims are true and backed by reli­able data. 
  • Avoid sen­sa­tion­al media. Web­sites go a long way to gen­er­ate rev­enue from click ads. Click­bait titles encour­age social shar­ing but are often baseless. 
  • Let go of assump­tions. Ask your­self if the news will have a real impact on the cryp­tocur­ren­cy sphere and what is real­ly affect­ing the situation.

To sum it up, always make sure you get your infor­ma­tion from rel­e­vant sources and stay away from misinformation.

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