FUD in crypto - Protecting your emotions and portfolio

What will happen if you woke up and saw a news update on a crypto website that Leo or Hive has lost 95% of their value? Or lets say a trusted crypto influencer just tweeted that a particular wallet where you have thousands in crypto has been compromised and funds stolen? For the two examples above, you will likely have this crippling feeling that something terrible - possibly irreversible - has happened to you. And if care is not taken, you could quickly jump into some drastic decisions you might regret later. The whole scenario that I created above is called FUD in crypto terms.

In this article, I will explain what FUD is and how it happens. Then I will suggest popularly-accepted ways to handle FUD if you find yourself in the mix. The most important things that you have to learn concerning FUD, is that you should protect your emotions and your precious crypto investments.

Understanding FUD in the crypto space

FUD stands for Fear, Uncertainty and Doubts. It happens when rumors or misleading information are spread about a particular crypto or crypto related project. The main aim of FUD is to make crypto users panic and take a wrong decision such as quickly selling an asset, subscribing to a fake crypto project or buying a shit coin. Usually the person or organization promoting such misinformation will make profits of some sort from the mistaken actions that will result when crypto users take such FUD serious.

Examples of FUD

There are many ways FUD can happen depending on the intention of the promoters. Consider the following 3 examples.

• FUD on crypto regulation: The current SEC crackdown on crypto is a very good example of FUD with regards to crypto regulations. As the SEC sued Binance and other exchanges, holders of BNB coin are selling off, leading to drop in value of such asset. And with Binance closing part or all of its operations in countries like Australia, there is on-going FUD with its global customers. In this case, the SEC and other governments spread wrong information about cryptos and deem them risky investment.

In addition to spreading such misinformation about crypto, the SEC has taken legal action against Binance and many other crypto companies threatening to shutdown their business or seize their assets. All these actions have created enormous fear, doubts and uncertainties in the minds of even most-loyal customers and users. So by creating misleading information and attempting to force regulations on crypto, governments or other authorities might create regulation related FUD.

• FUD on scam projects: The governments also create this kind of FUD to paint crypto as high risk investment. While there are really cases of FUD with scam crypto projects, its not usually as bad as the generalization that FUD's want you to believe. For example the FTX scam which stole millions of dollars of investor funds created massive FUD across the crypto sector. Then to make it all worse, the government gave this situation massive publicity almost across all media platforms. As a result, even first time crypto users or new people that wanted to give crypto a try had to back off.

So amplifying scam projects and creating massive awareness about them is a big way the government creates FUDs in the crypto space.

• Crypto price FUD: So an influencer or organization might predict that a particular crypto will drop in price. That will definitely create massive FUD around that crypto. Big time investors might start panic-selling of such assets in order to avoid potential losses. In essence, no such thing will happen. The promoters of such FUD might use the opportunity of price drop to buy as much crypto as they want. Now when the market has been manipulated temporarily, the price goes back to normal almost immediately and the FUD promoters take their profit.

There are many other forms that FUD could take, but the above are just examples that happen every now and then. So FUD is actually a bad thing for the looser and you do not want to find yourself at the receiving end.

How to Protect your emotions and portfolio

There are some things you could do to protect you emotions and assets. FUD can cause heartache, anger and regrets. When you find out you have been tricked into taking some wrong steps that led to losses, it destroys your emotions.

So consider the following generally accepted ways of staying safe from FUD:

• Always DYOR: Just as always advised, its better you dig deep and try to establish the credibility of any update you got. So it is better to always Do Your Own Research(DYOR). You could get credible information about any news item from the projects official channels. Of course, you could also consult trusted crypto websites where technical analysis are often available. Whatever decision you take should be based on sound knowledge of current events and general verifiable information from trust-worthy outlets.

• Put your eggs in different baskets: This is another general advice that is strongly recommended in the crypto space. Its better to have your portfolio spread across many different cryptos. The protection it gives is massive. For example, all your portfolio wont perform badly at the same time. Given the volatile nature of crypto, some of your portfolio will do well when a others are having a bad market. In this way, you minimize the risks involved in crypto investments.

• Stay informed: The crypto space is a rapidly-changing environment. All too often, new information comes on daily basis. New projects, market sentiments, framework modifications, etc. You have to stay informed. Its better to always find time within the day to check crypto news. Maybe you could subscribe to newsletters from credible outlets. Join crypto communities and forums when information is spread very fast and you could source opinions from various users. When you stay informed, it will be easy to take actions based on current situations in the crypto space.

• Get updates from credible sources: Beware of fake crypto websites that spread misinformation. Equally be alert to fake influencers and projects that spring up here and there. They are likely the first and easy grounds to originate FUD. Always check the websites where you get crypto news and be sure they are trusted by the crypto community. If you get authentic updates from reliable sources, you wont easily fall in the FUD trap.

• Portfolio automation: You can use available tools to manage your portfolio and automate some tasks in order to minimize losses. For example, many crypto trading platforms come with features such as stop loss.* Such a tool can help you cut losses by automatically selling your cryptos when there is a massive price drop. Price movements can happen so fast that you do not have time to take actions. But automation tools or features like stop loss does the job for you, when something terrible happens.

Conclusion

FUD is a strategy that has worked for users that want to profit from the panic they created. It is important to understand it and try to stay safe. Identify FUD when its happens and try to take necessary steps before doing anything. Always researching the situation and consulting other crypto users help a lot.

Be sure to check the source of information and automate some tasks. If you take great care on this matter, you wont fall prey to FUD promoters in the crypto space.

Posted Using LeoFinance Alpha