FOMO: The major reason why Cryptocurrency traders lose money in Nigeria

By: Damian Okonkwo

What is FOMO？

FOMO is an acronym for Fear of Missing Out.

It is a sudden emotional impulse that often pushes people to jump into buying a particular cryptocurrency often when the price begins to rise rapidly in the hope that the rise would rise very high over a long period of time.

FOMO is a very common mistake among new crypto traders who fail to understand the traditional movement of a particular cryptocurrency.

Many have defined FOMO as a psychological thing. Here FOMO is seen as the inability to control one's mind, emotions, feelings, and instincts leading to jumping into a crypto project without any research or having a good reason to do so.

Causes of FOMO

There are a number of reasons why people jumped into buying a given cryptocurrency without proper thought and due research. The major reasons could be seen below:

« Drive for quick profits: Many people today have joined crypto trading with the desire to make quick profits. They see crypto each crypto project on the rising asset to rise indefinitely to a new ATH. This is really a very wrong perception and crypto trading and greatly to be discouraged.

« Believe that the market will rise endlessly: During a perceived bull run, people tend to jump from one project into another especially those projects showing daily/weekly increase in their prices hoping that the rise will continue endlessly all through the bull run.

« Poor emotional control: It is regrettable to discover that up to 80% of Crypto traders today have no control over their emotions while trading. This leads to buying rapidly any coin they perceive as promising and likely to give more returns.

« Lack of knowledge: Not many today understand the rudiments involved in Cryptocurrency trading. Many new traders today lack an understanding of the place of fundamental and technical analysis before choosing any project to buy. This results in the careless buying of some popular cryptocurrencies in the hope that they will deliver good returns.

« Sponsored ads/ strong publicity created for the project: Excessive hyping of a crypto project on social media leads a large number of people to jump into the project without any research believing it to be true and genuine.

Negative effects of FOMO

« Often it numbs people's ability to think very well and carry out proper research about a crypto project before buying them.

« It brings excessive losses as some projects could be dumped forever after the hype.

« It blinds people into thinking that the time spent in carrying out analysis is likely to prevent them from gaining massively with others.

« It pushes people to invest more money than they can afford to lose into a given cryptocurrency.

« It brings unimaginable loss.