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What exactly is crypto FUD and Why Does It Matter? Blog

May 19, 2022

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This term, which has been around for a while, is woven into literature, marketing as well as investing. the term is now taking on a an entirely new meaning to the crypto crowd. This could have real consequences on crypto markets.

Find out the meaning of FUD, why it is important in crypto and the best way to deal with it the next time it comes up in your life.

What is FUD?

Traditionally, FUD is a communication and marketing term that means "fear, uncertainty, and doubt." It's the tactic of stoking fears about a specific product such as a market or brand.

In the 1970s through the turn of the century, FUD marketing or comms meant spreading information--or misinformation--about a brand, usually a competitor, to influence consumer doubts about the brand.

In the past, the word had been used in the reverse definition: FUD was a term used by brands to correct negative perceptions consumers had of their product or products or. Over time, however the aggressive marketing industry learned how to use FUD tactics offensively to alter the perceptions of their competitors.

In the stock market, FUD is a term used to describe fear, uncertainty, and uncertainty that could affect price fluctuations in stocks. Speculation, rumors, stories via social media, or even news that is framed to incite fears can cause investors to buy or sell en masse and move the value of a security rapidly.

The term "fud" generally is associated with negative meanings, especially in investing. The term doesn't mean logic or the process of vetting. The issue is driven by emotions and the effect of these decisions on the market in general.

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What is Crypto FUD?

Crypto FUD is less about the FUD marketing tactics of old and more about the resistance that is immediately erected against any sea-change that's difficult for the average person to understand.

What does FUD mean in the context of Crypto or NFTs?

As Fortune reports, FUD doesn't tend to influence long-term the value of investments. A lot of fear-based investments can influence the worth of an the asset class rapidly, however it is also common for values to rise rapidly, too.

It becomes a self-fulfilling cycle: When enthusiasts continue to buy into crypto despite widespread FUD, crypto market values show themselves to be resilient against FUD, and investors learn not to take reported concerns too in the extreme.

Because of this, crypto enthusiasts tend to employ FUD as a way to address the fears of the people who aren't part of crypto-related communities, such as, "Don't listen to them, they just have crypto FUD."

Affluent crypto skeptics outside of the core community can have negative consequences. For instance, China's banning of cryptocurrency mining and transactions last year, but it hasn't been proven sufficient to derail the entire asset class. Bitcoin price took a small hit after that action but then recovered over the course of the following day.

How are you affected by Crypto FUD?

At a personal level, however, crypto FUD--like worries about the financial market--may lead to rash decisions. If you're caught at just the right time with a story that raises doubt about the viability of mining crypto, for example, you could be prompted to dispose of your crypto holdings.

This is the danger of FUD regardless of the market it's in whether it's employed as a tactic to market or simply as a result of our human responses to poorly contextualized news stories, FUD can drive financially unsound choices.

It could range from voting for a political person who isn't in your best interests to the sale of your retirement savings in a hurry to destroying your crypto collection before it has enough time to get older.

Some of the most prominent advocates for Crypto recommend pushing through FUD--keeping your assets regardless of price fluctuations, referred to as "HODLing." This can create more anxiety within an individual, based on your tolerance for risk. Crypto markets are relatively young, without historical returns that can back projections of recovery. So advice to HODL comes with the same risk as advice to sell during uncertain times.

How do you handle crypto FUD?

Like any other important moves you make with your money, be sure to think about your crypto investments rationally before making any commitments. Or--better yet--pay professionals to help you think through your decisions.

If you're committed to committing large sums of money to cryptocurrency assets or NFTs, work with a financial advisor to determine the best place to invest your funds with the lowest risk, and greatest potential impact for your financial ambitions.

A financial planner that advises you on other investing options can be of great help in determining how much money you can comfortably take on in the crypto market. For determining what you should buy and when you should pay attention to the public's concerns regarding crypto and when not to, work with a professional who understands cryptocurrency markets and developments, since many financial planners and wealth managers aren't yet familiar of this particular asset (and could make decisions based on FUD their own).

Do not let Crypto FUD make Decisions for You

FUD is expected to stay, as long as marketing professionals know its power, in the same way that media outlets reap the benefits of its appeal, firms are incentivized to push out information that creates fears, uncertainties, and doubt.

You don't need to let them make your choices for you.

Stay aware of the intentional or accidental actions that propagate crypto FUD, and work with an experienced financial adviser to vet new information and make informed decisions about your cash.

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 This article is not designed to offer financial advice.