Mini Crypto Program Part 2 || "How Psychology Influences Market Cycles", by @rizkiblangpadang
After doing homework on Mini Crypto Program Part 1, according to my mentor's assessment there are still too many mistakes and shortcoming. I noticed it too, this time In Mini Crypto Program Part 2, I will try my best to do it better.
The topic this time is about "How Psychology Affects Market Cycles" which is certainly related to market psychology. Our mentor @liasteem, gave some questions which we had to answer and explain in a simple way that all readers can understand, the questions are:
- Visit the website CoinMarket, and explain what FOMO is!
- Explain what is FUD?
- Explain where FOMO occur! (Need screenshots)
- Explain where FUD occur! (Need screenshots)
- Choose the 2 cryptocurrencies you want, then use the graph of the 2 cryptocurrencies to explain where FOMO and FUD occur! (Need screenshots)
- Conclusions!
The term FOMO is similar to the cute komodo dragon character created by Kak Seto, namely KOMO, when I first heard FOMO term KOMO came to my mind. It's only natural for me to remember that funny character, because my subconscious remembers KOMO not FOMO, that's what is called Psychology with its various branches.
Fear of missing out, abbreviated as FOMO, is a condition in which a person is afraid of being said to be not updated, not slang, and afraid to miss the news that is being widely circulated. FOMO is a type of anxiety disorder, and excessive fear that is commonly felt by the millennial generation (born in 1981 to 1996) in other words my generation. Usually FOMO is a term for those with severe addiction to social media for fear of missing out on information.
In the world of Crypto Trading, FOMO is a psychological condition in the form of fear of losing opportunities so that you follow market and senior advice. FOMO often happens to novice investors who are new to investing in stocks and cryptocurrencies.
Traders and investors often buy cryptocurrencies even though there is little understanding of cryptocurrencies, and also many traders and investors buy cryptocurrencies at higher prices, when there is a price rally, but when prices fall they can only regret their actions.
So, it can be said in a short sentence that FOMO in the world of cryptocurrency trading is a phenomenon where traders and investors are afraid to miss out because prices continue to rise, forcing them to buy at very high prices.
The main cause of FOMO is because of the negative emotions that arise, such as Greed, Fear, and Envy. So that excessive anxiety arises which causes someone to be desperate to buy at a price that is too high. FOMO is closely related to a person's recent experience or better known as regency bias. The thought that prices continue to rise in the present and in the future is a misunderstanding of the market, because prices that continue to rise now do not necessarily continue like that, in fact they may fall.
Based on the graph above, we can see in the red column that I marked, FOMO Occurs here. As I explained above, because of the fear of losing the opportunity to become rich, many traders or investors buy Litecoin at the peak of the price, but what they don't realize is that the market is not stagnant and keeps changing, so that what they fear become reality, that they lose the opportunity to become rich.
FUD stands for Fear, Uncertainty, Doubt or often also called Facts U Dislike. FUD is a psychological strategy that plays with the negative emotions of humans, especially crypto traders and investors to influence the market. FUD is usually a sneaky trick of traders or investors who want to lower the price of crypto by spreading fear, so that in the end they can buy crypto at a low price.
In simple language, it can be said when there is a spread of hoax news to give fear to traders and investors about crypto movements with the aim of making market prices fall sharply.
Some people's negative opinions about market cycles can affect traders or investors psychologically. This creates fear, doubt and uncertainty and even changes their minds regarding strategies and plans for investing in crypto assets.
Without realizing it, those who are stuck with FUD are busy selling their crypto when it starts to go down, of course at a cheap price and which is of course much different when they buy it.
Of course, the cause of FUD is psychological factors in every trader or investor themselves who are trapped with fear, uncertainty, and doubt. While external factors such as hoax news about the market are only the triggers, as long as investors continue to hold on to their assets and are not affected by it, of course their assets will be safe.
The chart that I have marked above shows that FUD is taking place, many holders are releasing their Litecoin assets because they are afraid because the price trend is declining. When prices go back up, that's where their losses occur due to releasing assets.
According to the instructions, here I choose two cryptocurrencies, Litecoin (LTC) and Steem Dollars (SBD) to explain the FOMO and FUD that occur in the two cryptocurrencies.
We can see in the chart above that in mid-July, traders and investors were busy buying Litecoin gradually every day and the peak was in early September where Litecoin was bought at a high price. Of course, this is influenced by the fear of missing out on the opportunity to get rich which we know as the psychological phenomenon of FOMO.
However, the next day there was a massive sale of Litecoin assets, which triggered traders and investors to sell their Litecoin assets in groups because of the fear, uncertainty and doubt that we know as FUD. From mid-July until now, this is the worst FUD that happened.
In the chart above, it can be seen that the market movement in Steem Dollar is not as extreme as in Litecoin. But what is certain is that FOMO and FUD still occur even though they are not like Litecoin.
FOMO occurs in mid-July to early August, during August the movement is relatively stable between buying and selling assets, although sometimes FOMO and FUD still occur. Then, recently there was a severe FUD against Steem Dollars. As if Traders and Investors feel the need to quickly sell their Steem Dollars.
A person's psychology is very influential in the world of cryptocurrency trading, FOMO and FUD phenomena can occur because of psychological games that take advantage of negative human emotions. Traders and investors must understand deeply the phenomenon of FOMO and FUD, so as not to be trapped by harmful negative emotions.
That's my little understanding of how FOMO and FUD Occurs in the cryptocurrency trading. Of course, there are still many mistakes and shortcomings in this homework post.
Many thanks to Cut Kak @liasteem for initiating this program, as well as @stem.education officials including @heriady, @irawandedy and @klien.civil.
I invite my brothers in TSS whose reputation is still below 60 @jun.imaginer @arieffadly88 @pieasant @omarkhayyam @hendrasusoh @bonbons @pujiaman @qhamal @daengmarwan and @ofansr to be part of the "Mini Crypto Program".
Dear @rizkiblangpadang ,
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;
You must answer the questions according to the task given, and must be in order.
Don't use much copyright free images if not needed.
Avoid as much as possible any words that are superfluous and do not fit the practice.
You made a lot of progress compared to your previous workout.
Make your exercises as simple as possible with a good understanding, this will make it easier for you to provide exercises that are easier for others to understand, especially for prof. Who will judge your assignment at Crypto Academy later.
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
Thankyou cutkak atas koreksi nya..
Sama-sama @rizkiblangpadang
Kenapa tidak ikut Crypto Academy aja?
You can try it, we can learn together overthere
Rencana nya sih iya cut kak, ini msih mendalami socios.com sesuai PR, nnti klo udah siap postingan nya, lgsg aku posting..
Cutkak @liasteem ini PR saya di cryptoacademy entah betol gitu 😅😅😅
Haha,
Nntik kt tunggu hasil penilaian dari Prof.
👍👌😃
😅😅😅