Kraken’s new survey revealed that 63% US cryptocurrency holders believed emotional decisions had negatively affected their portfolios. Fear of missing out and FUD (fear, uncertainty and doubt) played a significant role.
In the survey of 1,248 cryptocurrency investors, 84% said they had been influenced by FOMO and 81% were influenced because of FUD. For 60% of survey participants, fearing missing significant price spikes was the most powerful emotional trigger. Only 17% were concerned with price dips.
The findings underline how emotions continue to drive trading strategies in the volatile crypto market, especially as crypto becomes an increasingly important part of investors’ portfolios.
Both FUD and FOMO are a danger
FOMO is the fear of missing an opportunity to profit, and it often drives investors into impulsive actions, especially when markets are high. According to the survey, 58% of cryptocurrency holders are influenced by FOMO frequently and 26% sometimes.
In contrast, FUD can cause panic or hesitation. In spite of this, a number of respondents said that these feelings had led them to lose out on long-term prospects. Investors felt that they missed major gains in 88% cases.
The age and gender of investors can have an impact on their emotional investment decisions. Investors aged between 45-60 were more likely than others to think they’ve missed out (78%) on gains made early in their career, but were also optimistic for the future (74%).
Men reported making more decisions due to FOMO (66%), whereas women only made 42%. The male investors expressed more regret than the females, as 70% of them believed they missed major gains.
Influence of social media
A major influence on trading behaviors is social media.
The emotional impact of trading on portfolios was reported by 85% of respondents who used platforms like Twitter and Instagram as a source for market information. Information is often rushed out, which can amplify FOMO or FUD. This makes it difficult for investors to keep a rational perspective.
In spite of the difficulties, investors turn to strategies to help reduce their impulsive decision-making. According to the survey, 59% of respondents used dollar-cost averaging. This method involves regular investment regardless of fluctuations in price.
AI trading bots and automated recurring purchases are also gaining popularity. These tools eliminate the emotional component of investing. These strategies allow investors to focus on their long-term objectives rather than being reactive to market fluctuations.
Despite FOMO and the FUD that surrounds it, 84% remain optimistic about the future. Investors over the age of 45 showed the most optimism. They believe there are significant gains ahead.
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