Crypto has been one of the most popular investments in the last two years. Although it has a high risk, many people choose this investment because the return they can get is also high. However, you better learn some techniques before joining this investment, not only about how to make a profit but also its psychological game.
One of the psychological techniques that exist in the crypto market is FUD. What exactly is a FUD crypto? Why do you need to be wary of it? Here is a full explanation for you.
What is FUD Crypto?
FUD stands for Fear, Uncertainty, and Doubt. This term is also often called Facts U Dislike. In the crypto world, FUD is a term to describe a psychological tactic that plays with negative human emotions. In this case, the targets are crypto players to influence the market.
Usually, some investors take advantage of FUD to lower the price of the coin so that they can buy it cheaply. They do so by spreading fear and doubt in the crypto community. Experienced traders will ignore this tactic and HODL their assets until prices stabilize again. However, if you are a novice trader, you should know this phenomenon and not be easily influenced by their tactics.
Example of a FUD Crypto
For example, Mr. A buys 200 units of a crypto coin for IDR 10,000/unit. A week later, some negative news made the coin price drop suddenly to IDR 7,500/unit. Mr. A, who was nervous and worried that he would lose more, ended up selling all his assets for IDR 7,250/unit.
The cut loss that Mr. A does is a sensible action. However, imagine if millions took steps like Mr. A. It would affect the market price. The market price of the related crypto will fall suddenly.
Then, after checking with credible sources or news from other sources, the negative issues that trigger the FUD are misleading. In the end, Mr. A loses big because he has to lose the value of his assets after selling at a much lower price.
If you pay attention, FUD tactics don't only exist in the cryptocurrency world. This technique is also often found in traditional markets. Therefore, you need to always pay attention to every issue that exists. Don't let yourself become a victim of rumors and take losses due to the fear that some people spread intentionally.
How to Avoid Being a Victim of FUD?
In some cases, FUD can indeed harm investors. However, with good analytical skills, FUD can also prevent us from bigger losses. For example, if in the future it turns out that a project is a scam, then investors can immediately sell all the related project tokens.
So, how do you take advantage of FUD content and avoid becoming a victim? Here are some ways you can do it.
Check Crypto Asset Whitepaper
Before deciding to buy a unit of crypto, first, check the whitepaper of the asset. A whitepaper is a document that contains a detailed description of a project. The contents include how the asset is created, interacts with users, the characteristics, the developer's identity, the purpose, and how the asset will be distributed.
A good cryptocurrency will have a clear and detailed whitepaper. Therefore, avoid buying coins with unclear information about their mechanism and purpose. Thus, the assets you have are more secure.
Always Look for the Latest Information and News
When a negative issue suddenly spreads, please don't believe it too easily. The second tip to using FUD crypto is to compare it with other, more reliable sources. Thus, the validity of the news will be more accountable.
When asset prices drop, find as much news and references as possible from various sources. If necessary, search for news in different languages to ensure that the information is also available in other countries.
Do Fundamental Analysis
There are many things you need to learn before investing in crypto. One of them is how to analyze its value. In this case, to verify the real value of crypto, you need to understand the crypto's key variables.
You need to pay attention to several things when conducting an analysis, including the level of demand to the frequency of transactions and trades. In other words, to know the ups and downs of prices, you can first understand the law of supply and demand.
What is the Difference Between FUD and FOMO?
Besides FUD, another term that also exists in the crypto world is FOMO, or Fear of Missing Out. This term describes beginners who join in on trading crypto assets because of the hype. Usually, people who experience FOMO have to follow what others are doing for fear of being left behind, especially when the price of one of the coins looks like it will increase.
FUD and FOMO are similar because they affect a person's emotional factors. Both are based on the fear of traders or investors in the crypto asset trading market. Nevertheless, the two have differences.
FUD is an opinion that can affect the psychology of traders or investors. This condition causes them to doubt or change their minds about their strategies and plans to invest in crypto assets.
Meanwhile, FOMO is influenced by someone's opinion about the state of the crypto asset market or other matters related to trading or investing. Usually, someone will feel FOMO if there is a big event or a talk from a crypto asset expert.
Crypto Margin Trading with Fulcrum Protocol
Fulcrum is a protocol that allows you to trade on margin. It means you can use your money as a base and have 2, 3, 4, up to 5x the power of your bankroll. In Fulcrum, you create a leveraged position that can multiply your money depending on your use. Fulcrum allows you to get investment loans and buy little by little instead of all at once in bulk.
The advantage of using the Fulcrum protocol is controlling your investment risk. It depends on how often you borrow, trade, and then invest. For beginners, you should only do it once in a while. While learning how the market works, you can learn how the prices of the crypto market go up and down.
Those are a few things about FUD crypto that you need to know. Investing in crypto, you should first learn about the techniques and the ecosystem. Don't invest just because of the hype or hoping for big and instant profits. Because, in investing, the higher the profit, the greater the risk.