Does 'FOMO' Impact Crypto Trading Volumes?

The cryptocurrency market is like any other, in that it can be influenced by a wide range of internal and external factors. Sometimes, these factors can be obvious, such as geopolitical events, but they are often much more difficult to identify.

Human psychology plays an enormously significant role. The actions and behaviours of traders and investors can have a huge impact on the market; they can see things like the Bitcoin price skyrocket or plummet. In this guide, we take a look at the phenomenon of FOMO and discuss how it can affect crypto trading volumes. Read on to learn more.

What is FOMO?

FOMO stands for ‘fear of missing out’. It’s a concept that has only recently been quantified and entered common vernacular, but it is in fact an incredibly old psychological phenomenon that is integral to who we are as human beings.

FOMO can be an extremely powerful factor that can drive us to do a number of different things. It can make us feel like other people are having more fun, making more money, or generally enjoying their lives more than we are. This is incredibly influential and is why FOMO has long been a marketing trick employed by brands and businesses to sell products.

We can see FOMO’s influence everywhere. It can motivate us to attend events and social gatherings, buy the latest tech gadgets or follow the latest fashion trends.

Social media has only ramped up FOMO. Now, we can follow the lives of friends and strangers in minute detail. We notice immediately when someone is doing something new, and this can encourage us to emulate their behaviour.

While FOMO has become something of an internet trend used in memes and social posts, in truth it is a deep-rooted psychological sensation that can have a big impact on our lives and the world around us.

FOMO drives industries like fashion, video games and consumer tech, but it is also integral to the world of crypto investing. Let’s find out more.

The ‘New’ Factor

When compared to other investment options like stocks or commodities like gold and silver, cryptocurrencies are brand-new. Bitcoin, the first cryptocurrency, launched back in 2009, and many of the most popular coins today are only a few years old.

The infancy of the crypto industry has proved key to its early success. The power of ‘new’ cannot be underestimated, it can drive investor behaviour and see markets grow significantly.

When cryptocurrencies first became available, few people were aware of them. However, over the course of a few years, they slowly became more popular. As more and more people got involved in crypto, the price of assets like Bitcoin soared, with some investors making massive profits. This fueled enormous interest in cryptocurrencies, motivating more people to look into these mysterious new digital currencies and buy them up in the hope of making a big return.

Cryptocurrencies are advanced, sophisticated technology. This is key to generating investor interest, and the ‘new’ factor of these assets triggered FOMO in huge numbers of people. FOMO has been integral to driving crypto bubbles and bull runs we’ve seen over the years, and likely will be again in the future.

The Power of Social Media

Social media has also been an important factor in FOMO-driven crypto trading volume spikes. Cryptocurrencies are closely related to internet communities. There are countless forums, platforms and groups dedicated to discussing and posting about crypto, with millions of members and followers taking part in online conversations.

News and updates in the crypto world spread like wildfire across these communities. This means that any new update to an asset or a price fluctuation will be instantly identified and can trigger mass actions, such as large-scale purchases or sell-offs of particular cryptocurrencies.

For example, if someone manages to pick up some Ethereum for a cut price, they’ll no doubt post about it on their favourite crypto forum. Other members, in fear of missing out on a good deal, will quickly move to buy some for themselves. This can have a huge impact on market trading volumes.

Memecoins are another example of how crypto and social media intersect to cause FOMO. Memecoins are cryptocurrencies inspired by internet memes and jokes. The most popular of these is Dogecoin, based on a popular internet dog, but there are countless others. These memecoins can generate huge interest and trigger FOMO across broad demographic groups, even in people who know little about crypto.

FOMO has always existed, but modern social media platforms have made it more powerful and influential than ever before. Nowhere is this more apparent than in the world of crypto, social media is integral to the crypto industry, it can trigger FOMO and cause huge market fluctuations.

Conclusion

If you thought FOMO has nothing to do with the world of crypto, think again. Fear of missing out motivates investors to both buy and sell assets in an attempt to mimic the success of their friends and fellow traders. Crypto trading volumes can be influenced by a number of different things, but FOMO has long been one of the most important factors.