FOMO in crypto: When are investors most likely to fall into an "emotional trap"?

In the cryptocurrency market, it’s not hard to notice a strange phenomenon: when prices rise, everyone is eager to buy in; when prices fall, everyone rushes to sell. This is not market wisdom but the result of a common psychological syndrome in the crypto community—FOMO in crypto, also known as “Fear of Missing Out.” This phenomenon profoundly influences the trading decisions of millions of investors worldwide.

What is FOMO and why is it dangerous in crypto trading?

FOMO stands for “Fear of Missing Out”—a psychological syndrome where people feel fear when missing out on a big opportunity. In the context of the cryptocurrency market, FOMO in crypto manifests clearly when investors see a strong price surge. At this moment, they are influenced by the mindset “if I don’t join now, I will regret it forever.”

The danger of FOMO lies in its ability to cause traders to lose their rationality. Instead of conducting thorough analysis, assessing risks, or considering long-term strategies, those affected by FOMO act unconsciously. They may experience negative emotions such as greed, envy, or frustration—these feelings lead them to make harmful financial decisions.

Warning signs when you fall into FOMO

The number of investors affected by FOMO is highest during periods of high market volatility—when the market is in an uptrend or a downtrend. During these times, emotions tend to dominate over reason.

People experiencing FOMO often share certain recognizable traits. They tend to have a high level of excitement, wanting to execute trades immediately when they perceive an opportunity. Their impatience during trading prevents them from taking time to reflect. They are always eager to realize quick profits, which often results in inadequate knowledge to make independent investment decisions.

Another clear sign is following the crowd. Those affected by FOMO often listen to information from online groups, friends, or surrounding people without verifying the reliability of that information. They lack a clear plan before participating, and FOMO makes them believe this is the only opportunity—if they miss it now, there will never be another similar chance. Lacking patience to think carefully and analyze thoroughly, they act impulsively without considering the consequences.

Deep-rooted causes of “FOMO disease” among investors

Understanding the root causes is key to effectively preventing FOMO. One primary cause is a lack of market knowledge. New investors often enter the market without sufficient understanding of crypto. When the market enters an uptrend, they quickly see temporary profits. From there, FOMO attracts more newcomers without the necessary knowledge. When the market declines, these individuals fall into a crisis state, suffering heavy losses.

Relying on unofficial information sources is also a significant cause. New investors often start from social media platforms, low-quality groups, and from there receive inaccurate information or even scam communities. This increases the likelihood of falling into FOMO.

The herd mentality is one of the strongest factors. When they see other investors “pulling” into the market to buy, newcomers also rush in for fear of missing out. Conversely, when they see the crowd selling, they sell immediately to avoid losing money. They do all these without truly understanding the market’s nature and current state.

Additionally, lack of a strategy before participating is a common issue. Many new investors join spontaneously, without a method or specific plan. Coupled with subjective psychology, they seek quick profits. Ultimately, impatience and distrust in their own decisions lead them to follow collective opinions rather than thinking independently.

How to escape FOMO: Specific strategies for crypto traders

To overcome FOMO in crypto, start with the basics. First, enhance your market knowledge. Do not trade until you fully understand what the market is about. Spend time learning, understanding fundamental concepts, how blockchain and cryptocurrencies work.

Second, selectively receive information. Prioritize official information from project founders, reputable news channels, rather than news from Facebook, Zalo, or other social media platforms. For new traders, distinguishing between true and false information remains limited, so be more cautious.

Third, stay calm when analyzing the market. Before engaging in any trade, consider what phase the market is in (uptrend or downtrend), what external forces are influencing it, and the overall sentiment. Calmness and deep analysis will help you avoid impulsive decisions.

Fourth, develop and adhere to a specific trading strategy. Before starting, clearly define your Entry (entry point), StopLoss (stop-loss point), TakeProfit (profit-taking point), and your capital allocation plan. These decisions should be made calmly, not during market volatility.

Fifth, manage your emotions. Practice patience and stick to your initial decisions. Do not change your plan just because the market fluctuates. Limit monitoring token prices frequently—because the more often you check, the more susceptible you are to short-term volatility, which can lead to FOMO.

Conclusion: Listen but make independent decisions

While listening to others can give you a broader perspective, you must not let those opinions influence your decisions. A decision that benefits the majority may be disadvantageous to you. When you notice FOMO starting to affect you, stop, take a deep breath, and recall your original plans.

FOMO in crypto is a common and dangerous “enemy,” but it can be completely overcome. The only way is to stay calm, follow your plan, and make independent decisions based on analysis—not emotions. This will help you protect your capital and achieve sustainable success in the crypto market.