FOMO, a wicked and insidious effect
Americans are crazy about acronyms and call it FOMO.
Europeans are more romantic and Italians reach the height of ecstasy if they manage to squeeze in a couple of Latin terms.
In this specific case we did not succeed and we must limit ourselves to referring to a bucolic herd of oxen.
We’re talking about getting on the accelerating train. The train in question is that of cryptocurrencies.
The Fear Of Missing Out is the one that risks leading those who were hesitant about entering an unknown, innovative, opaque market to invest in a moment of parabolic rise (a term that is popular today and has replaced the exponential) of prices of cryptocurrencies.
The fear of not earning is often greater than the fear of losing. And here individual psychological mechanisms come into play. If you lose money it is a fact that can remain in your personal private sphere. If, on the other hand, your brother-in-law buys the boat or the house in MonteCarlo with the earnings he has made and throws your sloth and cowardice in your face on every occasion, it becomes a public fact. And then the fear of not earning leads you to risk more than necessary.
This is no different than what has happened in the past with the stock market. The herd of oxen has always been there, indeed, in fact, the term comes from there.
Except that with crypto the reward, which in the past has been truly stellar, can still be very large, but the same goes for the risk of giving it a spin
If it is true that the reference crypto, Bitcoin, has grown over 150% in a year, it is also true that we are still around -50% below the historical maximum (ATH-All Time High, to put it the ubiquitous acronym). And at the beginning of the year we were at 22% of ATH. This means that those who bought in autumn 2021, at the historical maximum, lost almost 80% of their investment at the beginning of 2023. To make the firmest wrists tremble.
And the internet is full of amazing predictions and some out-of-the-box Cassandras. Investing in crypto also has an ideological connotation, which is never a good idea.
Of course, the ideal would have been for those who believe in cryptocurrencies to invest continuously over time to mediate prices. For those who enter today, the wicked FOMO effect is lurking.
The related Generative Artificial Intelligence question is posted in the dedicated gallery: Is Bitcoin coupled with gold?.