While cryptocurrencies represent a new kind of assets, still they are a part of the global market and are influenced heavily by a number of different factors. Nowadays risks are more than numerous. What makes the digital assets market special, however? The short periods of rising to the moon and victory marches of joke coins with super profits shift into sharp decline in a blink of an eye.
Millions of investors pour millions of dollars and digital assets into variety of ICO projects, most of which fail to meet expectations. How can average investor and trader survive in these circumstances and what are the most overhyped fails of the year up to date? Check out this latest summary about the one particular factor is has the power of impact more than others – FOMO.
Absence of certainty
Basically, FOMO means “fear of missing out.” What is it associated with? Given in consideration the stated above, numerous investors are undoubtedly concerned nowadays due to different reasons: they either fear to miss and not to buy some tokens of another ICO that seems unprofitable but will rise to the moon and give astronomical incomes to the first adopters. The industry sharks, having experience and a long history of winning and losing, still are are well aware of the immense opportunity to gain big time wins and are all ears when it comes to any news – the latest crypto exchange launch, another SEC bust of another Ponzi scheme or a new Mecca for ICO appearing.
Fact is, the market is still, and the stage of early development and many individuals believe in high future growth despite everything as the first who bought wins here. So the history tells that it is true – as it occurred regarding the tech company monopolies such as Microsoft, Google, Apple and so on. Also, the race isn’t over, so more and more people stay tuned as the volatile markets are making loud news headliners.
Looking into abyss
If a person has the FOMO syndrome, he does not rely on analytical data, but rather – on emotions – that goes for selling coins at a low price, being afraid for a further fall, or buying a cryptocurrency at a high price, fearing to miss further growth. The example is simple – specific investor reads the news and sees the ICO tokens grow in price by 100 times, but he did miss a chance to participate in it.
What happens next? The very same investor is experiencing much negative feeling due to the omission of such a great opportunity and starts to invest all the available funds in a variety of projects – without proper market understanding and experience. What causes that? They are driven by fear, and the positive outcome, in this case, is hardly an everyday reality. More often it happens that most projects will not come to the finish line, either fail shortly afterwards or reveals its SCAM nature. Not a rare things nowadays, you know.
Does FOMO have any positives sides though? Well, it helps to attract attention to the initial market and increase the value of some coins which price becomes growing abnormally – but all that are individual cases.
The failed year
Facts don’t lie – many 2018’s most promising ICO projects have fallen into decay – the real development and fulfilment of numerous promises proved to be much harder than celebrating the millions gathered.
The cases of the failed projects are enormous – the ones that failed before, during and after the ICO. For example, we can take out a few of the recent cases of 2018 – which less than a year went out “from hero to zero”. Well, some ICOs went sour from the start – others get worse during its development due to questionable management decisions, lack of community feedback, poor marketing, absence of MVP and a wish to fund own island or get a new shiny Lamborghini instead of pouring money into the project and proper working conditions for the team. All of it can get the wanna-be successful projects down quite soon after launch.
Moreover, the latest research, conducted by a small group at Boston College in Massachusetts, found that a mere 44.2 percent of token projects are active into the fifth month or beyond, using their social footprint via Twitter as a live indicator.
The BT’s token sale made many headlines shortly after the start. It has been named as a decentralized Airbnb format and become one of the most popular year’s ICOs. Problems started out when the hackers managed to get their hands on the Bee Token whitelist and sent out phishing emails a day before ICO.
Later on, as the initial day started, the investors had fallen into the well-made fraud pit. Bee Token team commented on social media, reporting, “The Bee Token has received reports of fake emails, Telegram accounts, etc. claiming to represent the Bee Token ICO Crowdsale”. Many had been unsatisfied with it, but the ICO eventually managed to get the hard cap. However, the confidence in the project had been broken, and the broadening of the audience did not happen. As of modern day, the total value of the Bee Token colony went down just to just $0.0092 from the $0,1 initial ICO price.
Another overhyped project of the year is Gems, which managed to successfully large Telegram group and non-less large level of FOMO. Made by the Harvard graduates project was named as ‘decentralized mechanical turk’. The whitelisted itself was a challenge – future investors had to share the project on a social network, write a blog post, or promote the ICO in some other way, effectively performing the duties of unpaid mechanical turks in pursuit of their ETH’s.
Well, after whitelist the tired investors were informed that the ICO would be conducted via Dutch auction in order to get as much money of their pockets as possible. However, this plan was canceled, and the more traditional private sale took place where Gems successfully $150 million – losing crypto community during it.
Moreover, the team kept a tremendous amount of 75% of tokens to themselves. After all, those who invested millions into the start-up got only tens of thousand dollars value nowadays. The team nailed it with ICO and it’s investors probably felt how is it to be a real mechanical turk.
And of the last examples is Rentberry
The real estate market tokenization is trendy – well, the doubtful investing in property rental security deposits still was not a warning sign for investors, as the Rentberry quickly got funding of $30 million.
Most of the reputation had been achieved due to already profitable business and the real estate market. However, the disruption of the market had not happened – poor-executed and limited MVP with the questionable marketing campaign made it and their BERRY tokens value quickly fell to $0,0076 from the initial $0,099. That’s being said doesn’t look like the real property deposit.
The whole cryptocurrency market is currently experiencing quite a rush. Some may indicate the parallel to the infamous gold rush which occurred back in the 19th century – more than hundred years went from the time as people crossed the continent for a ghost chance to get their hands of abnormal incomes. As many researchers and individuals believe the cryptocurrencies at large and Bitcoin, in particular, the digital form of gold nowadays, that is close to the truth.
Moreover, the most existing national currencies are fiat ones. Also, that means that nothing is backing them other but blind trust. And it is common knowledge, that through the history the precious physical metals, and gold or silver backed currencies had the dominant force.
The most significant risk of cryptocurrency related FOMO as it may fasten things too quickly – remember the December Bitcoin case of 2017, then the leading digital currency price was above the $20,000 milestone. Shortly after the news suggested that that futures trading is on the way and the price dropped all the way back down to the much lower point.
The thing is investors who rely only on FOMO to make their investments could risk making significant losses when it dies down. On the other hand, it is also worthwhile to consider that cryptocurrencies, in general, tend to go through both dramatic rises and steep falls. This is sort of a hallmark of this asset class at large. Over time, the trends for many of the top cryptocurrencies have been upward, which has made the so-called “hodlers,” or people who “hold on for dear life” experience astronomical gains over the past few years.
How to get yourself a FOMO shield?
Besides buying and selling coins, trading itself is highly influenced by FOMO and is a subject of different problems. Summing up the stated above facts, countless risks and factors make the trading nowadays quite a challenge all the time.
One stepping into the large-scale cryptomarket game and becoming a part of it’s worldwide ecosystem should think twice about it’s digital hygiene. Primary rules are simple – do not let the be fooled by the fraudsters. That goes for participation in risky projects, investing your last money into some overhyped ICO, accepting doubtful a offers to buy coins with large discounts by some shady individuals or involvement in suspicious and infamous Telegram and Facebook chats and groups.
Avoiding the negative factors, while stepping in the play being assured in liquidity and security is quite another game.A path of convenience in trading lies through implementing the most advanced tools to your benefits.
Fact is the currently existing crypto exchanges, being either centralized or decentralized ones (or working on the way to in) often struggle to keep the new users while keeping the old ones while having many drawbacks at the same time due to numerous reasons (read our previous article).
Besides, advanced traders and the newcomers should work at maximum convenience – having properly established the working process, trading can become much more efficient and less risky. The ideal scheme looks simple: one account — one verification — lots of exchanges — best orders — impressive profit.
One of such well-executed solutions, which exist already, is SWT. Implemented by, for instance, Arbidex platform, Single Window Trading makes trading on the crypto-currency market more comfortable and profitable for each participant. It provides the possibility to trade on major world exchanges via single account and can analyze thousands of pairs of crypto-currency and find the most profitable chains, earning up to 2–3% from each.
Speaking about the inevitable future – there is no doubt that the FOMO-factor will be reduced over time as more and more individuals will be attracted into the cryptomarket, and the digital assets reach worldwide adoption. However, at the same time, the crypto exchange will struggle more – the competition will be fueled since the number of new users will not be so lucrative as nowadays.
Still, there is a long time before we see a real process of slow-down as the current population is still highly unaware about the cryptocurrencies benefits of usage.
About the Author:
Maria Lobanova is a Journalist, cryptoenthusiast, contributor to Bitcoinmagazine and other media, one of organizers http://cryptospace.moscow/en and UnBlock Community conference in Hong Kong.