Decoding FUD And Its Impact On Crypto Users

FUD is an acronym that stands for Fear, Uncertainty, and Doubt. When the market discusses the term FUD, it means that there has been some type of negative event that seems to be suspiciously timed with large Bitcoin price movements that have a large impact on the larger crypto market.

The source of the FUD is constantly changing, but the impact is often the same: lower prices and a market wondering what happened and looking for something to point the finger at. 

Interestingly, some of the most successful investors in financial history believe that FUD itself can be predicted through technical analysis and that the news cycle is part of the overall cycle of human behaviour that the study of price patterns actually examines.

Impact Of FUD On Crypto Users

However, on a personal level, crypto FUD can prompt hasty judgments such as concerns about other financial markets. For example, you may be forced to sell your holdings if news comes out at the right time that casts doubt on the viability of cryptocurrency mining.

The danger of FUD in any market is this: FUD can influence people to make financially risky decisions, whether it is used as a marketing strategy or simply the result of emotional reactions to news articles that lack proper context.

This can mean doing anything from electing a political candidate who doesn’t stand for your interests to liquidating your retirement funds at a loss or destroying your cryptocurrencies before they have a chance to mature.

The most ardent proponents of cryptocurrencies often support pushing FUD and “HODLing ” or holding onto your holdings, even when prices are falling. Unfortunately, the level of danger you are willing to take can make someone even more afraid. Advice to HODL involves as much risk as advice to sell in uncertain times, as cryptocurrency markets are still very new and lack historical returns to support expectations of a recovery.

Examples Of FUD In Crypto Markets

Some forms of FUD appear so often that they deserve mention in this article. Let’s briefly introduce some of them, which will help you spot them from afar while browsing cryptographic news.

Bitcoin Will Die

This type of misinformation, usually spread by big-name sceptics like Nouriel Roubini or Peter Schiff, attempts to paint Bitcoin as a fad that will lose its appeal at some point. As a result, the value of the original cryptocurrency will reach zero and everyone involved will feel the financial consequences. 

However, history has shown us that this is just a dream. Moreover, with the growing institutional interest in Bitcoin and cryptocurrencies, it is safe to say that this will never happen. 99Bitcoins even mapped all of these BTC obituaries on their website with over 400 occurrences and counting.

China (Or Any Other Country) Bans Cryptocurrencies

Those who follow cryptocurrency news have seen this news several times over the years. In every bullish cycle, the Chinese government announces some form of cryptocurrency ban, and this happened in 2013, 2017, and 2021. 

It is worth noting that in neither case did the ban have a long-term impact. And it also makes you wonder, how many times can you ban the same thing again?

Regulatory Woes

As we mentioned before, cryptocurrencies are largely unregulated. Governments around the world are pushing for some kind of regulation, and that in itself is not a bad thing. Ultimately, this will make the crypto ecosystem a safer place for investors. Even if it takes away some of the freedom we are used to.

Overall you can see the pattern here. FUD is usually irrelevant information that is out of proportion to cause panic in the market.

How To Detect FUD?

As you may have already noticed, FUD aims to discredit the blockchain space and the cryptocurrency market as a whole. 

For example, the media will present Bitcoin as an elaborate scam or Ponzi scheme without providing any basis for these findings. Anyone who has looked into Bitcoin’s proof of work before knows immediately that this is impossible. However, this may ring true for the mainstream investor. It would prevent them from accepting cryptocurrencies as a medium of exchange or an investment tool.

So how do you bypass fake news and make up your own mind about upcoming events? There are several reliable ways to do this, including:

• Do your own research. Don’t fall for pro-or-anti-crypto propaganda. Before falling for FUD, try to assess whether the claims are true and backed by reliable data. 
• Avoid sensational media. Websites go a long way to generate revenue from click ads. Clickbait titles encourage social sharing but are often baseless. 
• Let go of assumptions. Ask yourself if the news will have a real impact on the cryptocurrency sphere and what is really affecting the situation.

To sum it up, always make sure you get your information from relevant sources and stay away from misinformation.