Bitcoin FUD Explained

Bitcoin (BTC) has experienced a lot of FUD over the last months. This is something that happens on a regular basis and that becomes even worse during certain periods of time. For example, during bull markets, FUD becomes a strategy for larger investors to acquire cheaper BTC and get exposure to the largest virtual currency in the world.

In this guide, we share with you what is FUD, how this works and why this affects the market on a regular basis. Furthermore, we discuss other topics related to Bitcoin and which are the things we should take into consideration when we invest in BTC.

Disclaimer: the information shared by AltSignals and its writers should not be considered financial advice. This is for educational purposes only. We are not responsible for any investment decision you make after reading this post. Never invest more than what you are able to lose. Always contact your professional. financial advisor.

What is FUD?

FUD is a very common term used in the cryptocurrency market to describe a situation of fear, uncertainty and doubt. Although the term is not only used in the crypto market, it is highly known and it became very popular due to Bitcoin volatility in the market.

According to Wikipedia, FUD is a strategy that influences perception using negative, false or fake news. The main goal is to generate fear and push people to conduct a specific action. For example, in the cryptocurrency market, FUD is always used to push some investors to sell their position in BTC or other digital assets.

FUD could be negative news that generates a massive sell-off or simply fake news that does not generate a sell-off but create doubts on investors that have positions on some digital assets. This doubt creates a situation in which the investor could eventually sell his portion of coins if a negative situation impacts the market, creating a larger sell-off in the future.

How Does FUD Work?

FUD works in two ways: weakening investors that had strong long positions or directly generating a sell-off in the cryptocurrency market. Everything depends on the current situation of the market and how digital assets behave.

The first and most common situation is the one in which fake news or negative things are spread without properly explaining them or generating confusion among investors. This could be something that is created by a person, group of individuals with some interests behind or even companies.

Most FUD news is also related to governments shutting down virtual currencies, prohibiting blockchain networks to operate or energy consumption lies. These are just some of the examples of some of the fake news that we could find in the market, but there are many others.

The other situation that we explained before, is a situation in which sudden negative news hits the market and the price of virtual currencies tank. This happened, for example, when Tesla announces that they were not accepting Bitcoin for their cars anymore due to concerns related to the environment and the energy consumption of Bitcoin miners.

Why is FUD Important?

FUD is very important to understand sudden price drops in the market. Most of these price drops are related to FUD such as “China banning Bitcoin” or similar situations. When that happens, this becomes a great entry point for long-term investors that want to increase their exposure to the cryptocurrency market.

At the same time, this helps us understand which are some of the entities, governments and institutions that are against BTC and digital assets. Understanding which are the circles in which we operate and which are the positions of the most important actors is definitely important.

Furthermore, for investors, FUD becomes a great way to enter the market during bull runs. Moreover, every single dip that appears is usually purchased by those large investors that have the possibility to enter the market.

What is FOMO?

FOMO is the exact contrary of FUD. Fear of Missing Out (FOMO) is a situation in which the price of Bitcoin or any other digital asset moves higher and the market gets so excited about it that enter long positions even when the market is overbought.

At the same time, a FOMO situation could be very dangerous for users that believe that the market would not give them another opportunity to purchase BTC or any other asset. These individuals would generally take loans or use their life savings in order to purchase BTC and get exposure to different virtual currencies.

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