What is FUD and FOMO

 

In the crypto world, the terms FUD and FOMO are very well known and must be known by investors, so they are more careful in managing cryptocurrencies.This blog also provides a test, are you one of those people who are easily influenced by FUD and FOMO, you only need to answer simple questions honestly.

What is FUD?
FUD is an abbreviation of Fear, Uncertainty, and Doubt, or what is often a pun as Facts U Dislike. Fud is often created and used by investor whales to lower the price of a crypto, so that investors can buy crypto at a low price. In order to cause FUD these big investors spread news that can cause fear and doubt to novice retail investors, these whales also sell some of their crypto so that the price goes down, novice investors think that crypto prices will really crash, so they rush into it. hurry to sell their crypto, then the price of crypto will drop even more, the price of crypto will drop to what the whales want, and this is when the whales buy crypto in large quantities. Experienced investors will be quick to respond if there is a FUD spread, they will remain indifferent, and keep their crypto HODL, or not sell it and just have to wait for crypto prices to return to normal.

What is FOMO?
FOMO stands for Fear Of Missing Out, or the feeling of fear of losing the opportunity to get big profits, so novice investors flock to buy crypto. FOMO is often used on new coins/tokens, or old crypto that is less well known but suddenly the price goes up, usually whales or through influencers tweeting on social media, they (whales) also buy large amounts of the crypto they are promoting, so the price really go up, of course there will be many new investors flocking to buy the crypto, After the crypto price reaches the height desired by the whales then suddenly the whales sell their cypto in large quantities, so the whales will make a big profit.

What can be done to avoid FUD?
To avoid FUD, when crypto prices fall, we need to look for valid news from various sources, so we will get deeper information about a crypto and need to do crypto price analysis, Don't panic and rush to sell all the crypto we have at low prices.

What can be done to avoid FOMO?
You can avoid FOMO by analyzing and calculating the risk of every time you buy a crypto (coin/token), thus avoiding buying crypto at a price that is too high. For example, if you believe an asset has a bright future, but it is already too expensive. Don't put all your money in at once to buy the asset at the high point. Because it is possible that the price of these assets can fall.

From the explanation about FUD and FOMO, it can be concluded that investing, especially in cryptocurrencies, cannot be done based on emotion alone. From the two terms above, you can learn to avoid trading based on fear. If you start to see FUD, study price analysis again and adjust it to your trading strategy. Then if there is a sense of FOMO when a coin looks like it has potential, re-study the chart of the coin and throw away emotions when trading.

Why Are Cryptocurrency Prices So Volatile?

 

1, Markets are narrative driven.
Cryptocurrencies do not generate returns like equity instruments that have revenue and profit data. The value of crypto assets cannot be estimated through ordinary capital market approaches such as through a company's financial performance or traditional fundamental indicators such as the price to earnings ratio. What happens is, the price of crypto assets is strongly influenced by certain narratives or news. For example, the rapid increase in the price of cryptocurrencies in 2020 was driven by Elon Musk's tweets on Twitter and his views on crypto assets.

2. Trading volume on crypto asset exchanges cannot be measured,
while on-chain size data cannot explain the actual conditions of the crypto market. The crypto market is formed from a network of diversified exchange platforms and providers rather than one centralized exchange. As a result, each crypto-asset exchange platform has different crypto-asset prices from one another. In other words, cryptocurrencies do not have a single price. This is different from the conventional capital market, where data on prices and volumes of securities traded clearly correspond to activity on the stock exchange. Investors also have difficulty measuring the trading volume of crypto assets because the on-chain volume data of a cryptocurrency does not reflect the total trading data that occurs across all crypto asset exchange platforms.

3. Momentum and volatility occur when the market responds to the trading algorithm.
In theory, cryptocurrency prices between crypto trading platforms do not differ much from each other due to the presence of algorithm-based trading in them. However, in reality, using algorithms for trading can make prices move drastically. For example, a decrease in the price of a crypto asset will trigger a “sell” action if the trader places an automatic sell at that price level. Unfortunately, this event will also be read by other market participants as a sell-off, so other traders will be too talkative by selling their crypto assets.

Factors Affecting Crypto Prices

 

Although the main factors that determine the price of crypto are supply and demand factors, there are several other factors that determine the price of crypto. Here are other factors that influence the volatility of crypto prices.

1. Monetary Policy and Tokenomics
Crypto supply greatly determines crypto price movements, so it is necessary to manage crypto supply which is known as "Monetary Policy", while its impact on crypto investors is known as tokenomics. To determine the number of coins/tokens in circulation, each coin/token has its own governance policy. In a crypto case, governance can be determined through voting (based on the number of crypto holdings), or using a centralized method, through a special crypto management board tasked with controlling the crypto supply. Some crypto developers, through their special board choose to burn crypto to reduce the amount of crypto supply in circulation. Like Ethereum, Binance Coin, Shiba Inu etc.

2. Production Cost
Crypto mining activities require mining costs, ranging from computers, mining hardware, air conditioners, electricity costs etc. All mining fees will have an impact on the crypto price.

3. Demand for Blockchain Technology
The demand for a crypto asset will soar if the crypto community takes advantage of the blockchain technology which is the home of the cryptocurrency. This happens because the fees for using the blockchain are paid using the blockchain's native cryptocurrency. So the demand for cryptocurrency will be in line with the increasing use of blockchain. There are various reasons why the crypto community swarms over a particular blockchain technology. Usually the three main reasons are better transaction scalability compared to other blockchain technologies, the emergence of new features, and the low transaction costs of utilizing the technology.

4. Mass Adoption of Retail and Institutional Investors
The massive increase in the use of the coin will lead to a strong price increase. This is because most cryptocurrencies have a limited supply, so an increase in demand will certainly raise their price. It's just that, to be mass-adopted, cryptocurrency must have clear benefits in the real world, for example, it can be used as a means of everyday payment. Cryptocurrencies such as Bitcoin have been adopted by institutional investors as a store of wealth. Hence, the price had increased and reached the point of US$ 60,000 per chip in early 2021. In addition, El Salvador also plans to use Bitcoin as an official means of payment in the country. Meanwhile, the pattern of cryptocurrency adoption by retail investors forms a bell-shaped curve, as shown in the following figure. Only 150 million individuals in the world hold crypto assets. When compared with the world population of over 6 billion, it can be said that the adoption of cryptocurrencies in the world is still in its early stages.
Both retail and institutional investors are starting to look to the long-term value of cryptocurrencies. The rapid increase in the prices of several crypto assets in 2021 is proof that the strong demand from institutional and retail investors continues to increase the demand and prices of cryptocurrencies. In addition to supply and demand, global macroeconomic conditions also have a strong role in influencing the price movements of crypto assets.

5. Fiat Currency Inflation (USD)
The price of crypto assets, especially coins that have clear uses, should increase amid moves by global central banks to continue to print money and implement low interest rate regimes. This can happen because the characteristics of the supply of fiat money are different from those of cryptocurrencies. The supply of crypto assets is fairly limited, so people should switch to this instrument if the amount of fiat money in circulation increases. It is important to remember that Bitcoin was created in response to the massive printing of fiat money (USD), which was being done by central banks around the world to deal with the global financial crisis. This move is likely to be repeated in every economic recession where policymakers have no choice to stimulate economic growth other than cutting interest rates or printing more money. 25% of the US Dollars in circulation today were minted in 2020. In addition, owners of crypto assets also now have the opportunity to profit from saving crypto assets by obtaining higher returns than saving in conventional banks. Now, this can be done along with the widespread use of decentralized financial applications (DeFi). High yields and tight inventories make crypto assets useful as hedges against inflationary scourges caused by printing money.

6. Government Regulation
A series of government regulations can affect the demand and supply of crypto assets. This condition can occur because the government has the authority to regulate, tax, or even prohibit cryptocurrency activities, which will usually lower the price of crypto assets. Crypto investors not only need to understand crypto regulations in their country, but also need to observe how the United States regulates crypto in their country.

7. Momentum
Like any other financial market, the price of crypto assets is determined by speculation. Retail traders, institutional investors, and global hedge funds have different views on market conditions and these differences can affect the price of cryptocurrencies. Price movements in the crypto market can be very fast and wide. This happens because many traders are using algorithms in exchanging cryptocurrencies. If the crypto price penetrates a certain point, the algorithm system will execute a buy or sell action. This action will then trigger the actions of other traders where their actions will then also affect the movements of other market participants. Since market participants tend to find it difficult to judge the price of crypto through fundamental aspects, attention is then directed by horrendous issues and news or calls to buy or sell by crypto advocates. For example, the price of crypto can crash when a crypto asset influencer, such as Tesla retainer Elon Musk, posts a tweet or creates a meme about cryptocurrency on his Twitter account.

5 Best Sites for Predicting Crypto Prices

 

For traders and investors should always and constantly monitor the state of crypto market prices and the possible evolution of crypto. Although all crypto price predictions are not 100% accurate, they will at least be a reference or guide before analyzing crypto prices using graphic patterns or price trends. So we need to open sites that predict crypto prices, as additional information. To help you with your trading strategy, we have created a list featuring some of the best cryptocurrency price prediction sites.

1. Walletinvestor

Walletinvestor is a site that focuses on all things financial, including forex and crypto. The company's goal is to provide an accurate price prognosis and to display the current exchange rates of various currencies. When you select a crypto, you will be brought to a page with easy-to-understand charts, forecasts and comparisons with other cryptocurrencies. You can view predictions for a specific asset by selecting from a range of 2-week, 3-minute, 6-minute, 1-year, and 5-year forecasts. This system makes this site perfect for active day traders and HODLers. Crypto predictions are made for each day of the month and also display the minimum, maximum, and average price of a coin. Cryptocurrencies with medium or low trading volume only have predictions that last for the next few months. There are far more crypto assets and predictions and analysis for them than with forex assets. The site also features a blog section called “Magazine” which consists of various articles on Blockchain technology and market news.

2. Tradingbeasts.com

One of the most used cryptocurrency price prediction sites is TradingBeasts. Unlike other financial platforms, it only focuses on cryptocurrencies and their monthly forecasts. Regardless of trading volume, TradingBeast makes predictions for over 400 coins over the next three years. Each crypto has a monthly maximum, minimum, average, closing price, and there is also a percentage change displayed.

3. Fxstreet.com

Fxstreet is a site dedicated to analyzing crypto and forex assets. Their daily crypto reports feature analysis based on charts and trading signals, which is more suitable for short-term trading. The site also includes guides to technical tools, crypto trading strategies based on specific indicators, how to buy cryptos, and how to trade in regulated markets, such as crypto futures.

4. Finder.com

Finder is a crypto site that has various guides on hundreds of coins and contains tutorials on how to buy, trade and store them. The website also has great reviews for various exchanges and wallets as well as instructions on how to use them. The site has a section that displays price predictions for many cryptos while looking at the various factors that can push prices up or down, but these predictions are only on an annual basis.

5. U.today

U.today features a variety of crypto-related content, such as price analysis, opinions from leading figures, news, stories and guides on mining, wallets, exchanges, trading bots, cryptocurrency trading, dapps, crypto lending, and blockchain. The site posts predictions based on analysis of the latest charts and indicators almost daily, focusing on Bitcoin, Ethereum, XRP, Tron, and EOS.

Crypto Market Psychology

 

Because it always involves humans, the crypto market will always not escape market psychology, because humans have feelings of fear and greed. On an individual scale, this would be called trader psychology, and on an overall scale, this would be called market psychology.

What is Crypto Market Psychology?
Of course, when it comes to short-term and long-term price movements in the crypto market, there will be two-way differences. Not only will it be the difference to see if the price will go up or down, it will also be the difference between whether the price will continue to rally or consolidate. The psychology of the crypto market is a psychological picture of the actors in it, who ultimately move the market because there is a winner (a majority point of view) who moves it. Of course, in every price movement, there will always be parties who make profits and gain losses at the same time because the money has flowed to those who have won. When the price strengthens, it means that most market participants think that the price is under its proper value (undervalued), or it could still be in a bullish trend. On the other hand, when the price weakens, it means that most market participants think that the price is in an overvalued position, or it could still be in a bearish trend.
What Affects It? While there are quite a number of factors, there are two general factors that greatly affect the market, both in the short term and in the long term. These two factors are technical and fundamental factors. Two factors that are very commonly used in various other markets such as the foreign exchange market (forex), commodities (gold, silver, palladium, oil, cotton, etc.) and stocks. However, it should be underlined that, all these factors will lead to a level of balance between the “demand and supply” of an asset in the crypto market. This is the essence of asset price movements.

Fundamental Factor
In terms of fundamentals, market participants, traders and investors will use the sentiment of an economic news as the basis for reading the prospect of future price movements. For example, when China banned crypto mining in mid-May 2021, market participants entered a fear phase that led to a massive sell-off. Why? That's because psychologically, they are worried that there will be a downside for crypto assets so they liquidate their holdings to observe how the market will go. Looking for security makes investors look at other assets that are less risky, such as the US dollar, because at that time there was hope for stimulus and so on that made the US currency strengthen until the end of 2021. And most recently, when the US inflation data hit its currency, crypto assets tried to bounce back in mid-January as the market's rapid attitude to risk appetite made risk assets like crypto look back. Is this a sign of a recovery in the crypto market? Not necessarily. The news may only be short term because this will depend on how big the impact this sentiment has on the global economy. 

Technical Factor
From a technical point of view, market participants will stick to the signals of past price movements, or commonly known as price action. In price action, market participants will usually use a mapping called the support and resistance (SnR) area.

The SnR area will usually be mapped from the main high and low points of a price movement. It can be seen, when the price goes up to enter the resistance area, the price starts to get a strong selling resistance. Meanwhile, when the price enters the support area, the price starts to get a strong buying resistance. Indeed, to be able to map the area, it takes a lot of experience and flying hours. However, this is what makes traders able to gain profits faster than investors. Take advantage of the huge price volatility in the crypto market. In addition, the use of tools such as indicators and technical tools is also commonly used to help traders make their trading decisions. But make no mistake, technical analysis can also be used as a guide for long-term investment. On the other hand, fundamental analysis can also be used as a guide for short-term transactions. In essence, these two factors are the driving force of the human psychology in it, to move simultaneously (on a massive scale) and to become the psychology of the market that drives asset prices, in this case, crypto assets.