Mini Crypto Program Part 2 ||" How Psychology Influences Market Cycles" , || 10% of the payout to @steem.education
Good morning from this part of the world, I'm @bascot. I've been following this mini crypto program for since the beginning, I would like to thank @liasteem and @steem.education for bringing up this program.
After reading @liasteem lecture this week, I have a good idea of what FOMO and FUD are, and I'd like to express them in my own words.
Q. Visit the website CoinMarket, and explain what FOMO is?
What Is FOMO
FOMO is an acronym meaning Fear of missing out, It's just a circumstance in which a person is terrified of losing out on all of the enthusiasm going on around him or her.
FOMO in the markets refers to the fear of missing out on profitable chances in the present market environment. This is especially true during a bullish market run, when there is a lot of "good news" all over the place, in the media (Twitter especially), on the crypto newsoutlets, and so on. It's a time when the markets are extremely bullish, and you can see and hear that many people are profiting from the present bullish trend. As a result, a person develops FOMO since he or she does not want to miss out on such a wonderful chance.
In this case, the individual's perception is completely obscured because he or she is not making solid investing selections based on a combination of fundamental and technical analysis. Instead, the individual rushes into the market and believes the rumors.
There are three things that leads people or traders to fear of missing out (FOMO)
Greed: this is very common among the traders, some of the traders are greedy they want to make X4 of their investment
Excitement: this is the joy of missing out on a bullish Market, you don't want to miss out.
Impatience: when you are not patience enough to do fundamental and technical analysis, you just jump to buying the coin.
Anxiety: This is when a trader enters the market because the rest of the world is doing so, or because all other traders are doing so. The trader does not conduct any analysis; instead, he or she simply executes the transaction without thinking it through.
What Is FUD
FUD is an acronym for Fear, Uncertainly, and Doubt. FUD is a personality trait that makes it difficult for you to predict when the price of crypto assets will rise.
This is a scenario in which the markets are in an uncertain period, and a trader who has been watching the value of his assets depreciate finally decides to sell them off at a loss due to a combination of emotional and psychological factors such as fear, lack of patience, overgrowing losses, and little to no knowledge of market cycles.
FUD is common in a bearish market, during this bear when the value of the asset is going down the trader will panic sell it at loss.
Q. Explain where FOMO occurs! (Need screenshots)
FOMO usaully occurs during an uptrend, that is when the market is bullish.
The screenshoot above displays a Bitcoin Chart and a stage where market traders may be affected by the FOMO. Users that regularly fall into this FOMO state may wish to acquire the BTC at a time when the market is at its bullish point, based on the recent growth in the market. This traders may be greedy, he or she wants to make a lot of money in the market's bullish cycle. In order to double their profits, they will buy assets at this point with the goal of making X4 or more profits.
Looking at the screenshoot very well, it is very clear that any trader that buys the assets at this time would lose a lot of money due to the market's immediate negative cycle.
Q Explain where FUD occurs! (Need screenshots)
FUD usually occurs during a downtrend, that is when the market is bearish.
The screenshot above displays BTC chart, you can see the quick downtrend (bearish) of the market, this may cause a market trader to sell all assets out of fear or uncertainty that market prices would continue to go down (bear) without a going up (bull). This means that during the FUD cycle, people lose a lot of money and are afraid of losing even more assets.
Choose the 2 cryptocurrencies you want, then use the graph of the 2 cryptocurrencies to explain where FOMO and FUD occur! (Need screenshots)
In this section of the task I will be using two asset which are BTC/USD pair and ETH/USD to show where FOMO and FUD occurs.
BTC/USD chart
Looking at the above screenshoot, in the area I draw a purple rectangle, you will see that FOMO occurs, this occurs between 31st of August 2021, to 6th of September 2021 this is because numerous traders are buying the BTC and don't want to Miss out, the market movement was very massive between this days.
Then on 7th of September 2021, FUD begin to occur till date, the part that I draw with yellow rectangle and this is because the traders are panic selling their BTC.
ETH/USD Chart
Let look at the ETH/USD chart and show sheee the FOMO and FUD occurs.
From the above screenshoot, the area I draw a blue rectangle, you will see that FOMO occurs, this occurs between 30th of August 2021, to 3rd of September 2021 this is because numerous traders are buying the ETH and don't want to Miss out, the market movement was very massive between this days.
Then on 7th of September 2021, FUD begin to occurs, the part that I draw with yellow rectangle and this is because the traders are panic selling their ETH.
Conclusion
The market is a tremendously strong area where emotions are allowed to run wild. The markets repeatedly offer us these indicators simply because these are psychological, emotional reactions of market participants. This helps to explain why every bull market ends in a bear market and a bear in a bull market.
It has been discovered that FOMO and FUD are passionate stages in the trading cycle, and that they must be a monitor with a significant impact on the grounds that as a newbie, one may be unsure whether to buy or sell, but with caution, and proper fundamental and technical analysis one can make a better decision by examining the FOMO or FUD of the market all around. This is to keep one safe from loading out in Investment and not sharing from okay others misfortune.
I would like to invite @goodybest, @chabby and @kentluis to take part in this wonder program
Thank you all for reading!
Cc: @liasteem and @steem.education
Dear @bascot ,
Thank you for participating in this Mini Crypto program, I really appreciate your good intentions and your efforts in understanding our practice this time.
Here is an assessment of your practice;
This is a good explanation of FOMO and FUD.
God job 👍
I hope that you and I can study together at Crypto Academy.
Thank you very much, we will waiting for your next exercise, and we will waiting you at the season 4 of Crypto Academy. 👍💪
Has been assessed by;
@liasteem
@steem.education