What Is FUD? How Cryptocurrency Uncertainty Moves Markets

Crypto can be crazy. 

New millionaires are born daily, government bans are rampant, and Tweets create millions in seconds. It’s natural if you feel uncertain about cryptocurrency as a whole. That feeling? Traders call it FUD, and it’s rampant in the crypto world today more than ever.

If you want to leverage crypto to make passive income, you need to understand and overcome FUD and FOMO. That’s a lot of acronyms, but don’t worry. By the end of this 6-minute read, you’ll know the secret to beating FUD and winning big. 

What Is Cryptocurrency?

When we cut through all the buzzwords, cryptocurrency is quite simple: it’s just digital money. You can use cryptocurrency as a medium of exchange, to keep accounts, even as an investment vehicle.

Cryptocurrencies don’t run through a government or central bank. Instead, they’re governed by their users via decentralized ledger technology (AKA the blockchain). This database records cryptocurrency transactions on thousands of computers concurrently. Security is no issue — all of them protect the information through powerful encryption.

Crypto’s decentralized nature has led to many savvy investors using it to earn money, like stocks or Forex. But the relative novelty of the cryptocurrency space has led to something we call FUD.

What Does FUD Mean?

FUD stands for fear, uncertainty, and doubt. It’s used to describe people’s discomfort about Bitcoin, Ether, and the crypto market in general. FUD tends to rear its ugly head in moments that throw ideas about cryptocurrency into question. Take China’s recent ban on cryptocurrency: it’s led to drops across the cryptocurrency community. Even Crypto Godfather Bitcoin fell more than $2,000 alone. 

Another aspect of FUD is the fear of missing out, or FOMO. Cryptocurrency has low entry barriers and a high potential for profit. This lets reactionary investors move markets very quickly. FOMO and FUD are two sides of the same coin, but uncertainty impacts crypto in other ways as well.

Factors That Cause FUD In The Crypto Community

Thought leaders

We call it the cryptocurrency community because it’s precisely that: a community. Like any group, there are thought leaders whose views and opinions hold more weight than others.

Can a single tweet erode millions of dollars in value? Just ask Elon Musk. 

After tweeting a breakup meme about #Bitcoin, the coin price fell more than 4%, along with Ethereum and Dogecoin. Notable thought leaders in the space also include Jack Dorsey and Mark Cuban.

Controversies

Bitcoin, Ether, Dogecoin, and several other crypto coins have developed a knack for attracting controversy. Critics have speculated about using crypto to launder money, sell drugs, and other illicit activities. 

Recent news about Bitcoin’s climate impact has caused uncertainty about crypto as a next-gen form of money as well. While this hasn’t impacted coin price yet, it’s an example of the external controversies that affect the market.

Government action

The crypto market is independent of the government. That kind of decentralization comes with several benefits. After all, we all like full transparency and low barriers to entry. Unfortunately, it also means the markets are extra sensitive to government action.

Government action takes many forms. Sometimes, it’s regulation like China’s crypto ban. Other times, it’s lawful action. Take the US government’s recovery of the Colonial pipeline ransom money, for example. It led to a 9% fall in Bitcoin! 

Regardless, regulatory action can shake faith in cryptocurrency for many newer traders.

Crypto whales

A crypto whale refers to any party buying, holding, or selling massive amounts of a cryptocurrency. The crypto market is worth over $1 trillion, but traditional stock markets still dwarf it. That means the actions of a whale can have a much more significant impact.

Many traders follow their movements as signals for what’s coming in the market. (They’ll use block explorers to track buys and sells). If a coin price starts changing rapidly with no apparent cause, there’s a good chance a whale made an investment or sale.

Getting Past Fear, Uncertainty, and Doubt

Like any new technology, the initial stages of crypto acceptance are filled with confusion. While it may be the future of finance, it’s easy to succumb to water cooler chat, news headlines, or viral tweets. Many traders insist the FUD is a deliberate psychological tactic to sway people away from crypto. 

Whether or not that’s true, there are a few things you should do to get past FUD and FOMO:

• Do your research. There’s a wide world of crypto resources out there (including this blog!) that can educate you about the basics. Decide on your investment strategy beforehand, so you know what your goals are. Fear comes from uncertainty, so avoid it by gathering as much information as you can.
• Only follow the essential news. It’s tempting to get caught up in crypto spaces on Twitter, Reddit, and YouTube. Easier still to look out for the daily headlines about the newest crypto millionaire. Best to cut through the noise and focus on two to four sources you can trust.
• HODL! To hodl is to have faith. (If you’re confused, ‘hodl’ is an intentional misspelling of ‘hold’ that the crypto world has adopted). Right before you buy a coin for the long-term, write down your reason for doing so. If you ever feel like panic selling, read the list to stop yourself.

How to Win With Crypto Despite FUD

Clearly, there’s a lot of volatility and uncertainty in the world of crypto coins and tokens. You might be wondering how it’s even possible to ever make a profit off the markets. The secret? Don’t try to fight crypto volatility — let it work for you.

Marketing guru Dan Hollings has spent years perfecting The Plan. It’s a crypto investment system that uses grid trading to turn market fluctuations into profits. You can use The Plan to turn the market into a passive income machine by: 

• Using the right tools.
• Selecting the right coin pairs.
• Buying or selling at the right price.

Curious about how to get started? Click HERE

Frequently Asked Questions

What does FUD Bitcoin mean?

Bitcoin, the original and most popular coin, is highly susceptible to FUD. Whenever a thought leader Tweets, a government acts, or a whale sells, the coin is vulnerable to rapid changes. 

What does FUD mean in investing?

Fear, uncertainty, doubt. FUD appears in many investing contexts, including traditional Forex and stock markets. Recently, it’s been adopted by the crypto world to describe efforts to detract from the Web3 cause.

How long should you hold a cryptocurrency?

Your length of holding depends entirely on your investment strategy. If you’re a more casual trader, holding for a few weeks or months may be sufficient. If you’re looking to invest long-term, consider holding on to your coins for at least five years.