Investments have two sides: a positive one and a negative one. The positive means delivering important income to investors, while the latter can mean the loss of capital. In this context, it’s natural that traders and investors protect their money and are attentive to fluctuations in prices and conditions all the time.

In this regard, one of the main crypto terms crypto traders should know is crypto FUD. This concept reflects the negative expectations of traders after they buy Bitcoin or any other cryptocurrency.

But What Is FUD in Crypto?

As a preview, I can tell you that you must know this concept to understand changes in appreciation of cryptos, their prices, speculations, and trends. Having said this, let’s enter into the subject and explain this general feeling of pessimism.

FUD is the acronym for Fear, Uncertainty, and Doubt. It means FUD refers to negative thoughts related to investments, assets, tokens, and shares and their functionality. FUD is based on emotions and ideas that people involved in a particular market may feel about a specific product. In general, FUD makes that value change, decreasing the trust in the product. FUD can occur due to the following reasons:

• Information that can be true;

• Rumors that are not true;

• Rumors spread to cause panic in the market so that manipulators can profit from everyone's losses.

In short, FUD occurs when people related to the crypto world share negative news about a project with the intent to spook investors.

The FUD feeling in the crypto community is high. The crypto market is full of uncertainties, either justified or not, that make the market highly volatile.

Although the term FUD originated a century ago, in the 1920s, it gained prominence in 1975 with the rise of new technologies and personal computers. During this time, a former IBM executive observed the strategic use of FUD to dissuade customers from switching away from IBM.

With the advent of the crypto world fifteen years ago, the decentralized economy was revolutionized, and crypto investing started to occupy a relevant spot among people looking to diversify their economies.

However, like in any other investments and currencies, digital assets are not free of uncertainties. Crypto traders know this and try to reduce FUD to capitalize on the crypto industry.

A common example of FUD is a certain rumor through which people communicate that a particular crypto has been hacked. This situation undoubtedly will reduce people's trust in that crypto, which means a decrease in its real value.

Governments Banning Cryptocurrencies

Multiple countries around the world have started to set regulations around crypto assets due to their anonymity and privacy. Some countries, like China, have even started to ban Bitcoin and other cryptocurrencies because they cannot control and regulate their usage. This situation has caused many people to distrust the use of cryptos in their countries.

Bitcoins Are not Sustainable 

In the crypto space, there is a belief that Bitcoin uses a lot of energy to work, which is not sustainable and means significant damage to the planet. Most people refer to this situation by mentioning that cryptos like Bitcoin, Ethereum, Dogecoin, and Litecoin need vast sources and computing power to work.

The Typical Down in the Crypto Prices

There is not a single crypto project that has not had drops in its asset prices. It is very common in highly volatile markets where speculation and trades define the price second to second. For this reason, crypto holdings exist to ensure a certain level of earnings in the long term.

However, price drops make market participants feel insecure about the profits of their crypto investments, which is natural due to the actual scenario. Negative news about the value of digital currencies can be one of the most dangerous regarding FUD.

Influencers Sharing Their Opinions of Cryptos

Nowadays, influencers have a lot of power regarding the opinion of their followers, being able to tip the balance regarding the success or failure of a product, and cryptocurrencies are not the exception.

Via X, formerly known as Twitter, crypto influencers usually share their thoughts and opinions about a particular cryptocurrency. These opinions can impact crypto’s values, especially when it comes to negative information. It can create fear among investors, causing them to panic sell their assets, leading to a drop in the token's price. However, these FUD moments tend to last just a few days or weeks.

Distrust in New Cryptos

Currently, there are over 23,000 cryptos, according to CoinMarketCap . What’s more, a new token is released to the market almost every day. In this scenario, it’s understandable that many traders distrust new cryptos or a certain coin. People are unsure if this asset will work in the coming days!

Changes in Crypto Regulations and Taxes

We all know that the world of investments is highly volatile. This situation is even worse regarding cryptos due to the lack of clear rules about it. There are indeed some regulatory institutions, such as the Commodity Futures Trading Commission (CFTC) , but the scenario is not totally clear yet. This reality may mean two things: new regulations could change how crypto works, or current cryptos could be levied with new taxes.

Uncertainty about incoming taxes and other regulations that may change the asset’s price is one of the most crucial for investors.

Fear of Solar Activity

Even though solar storms and other natural activities may not have a direct impact on cryptos, the fear provoked by speculations about natural events shutting down technology-based currencies is real. Okay, maybe it could happen in the future, but there is no scientific proof about it yet.

Some articles regarding solar activity were originally published in 2023, and although they can raise alarm bells in this regard, probably, user funds will not be affected.

A very common mistake is to confuse FOMO with FUD by using them as similar concepts. It’s an error since two acronyms mean totally different things and refer to distant feelings.

FOMO, on the one hand, stands for Fear of Missing Out on something, which means people feel anxiety about losing a great opportunity regarding offers, a lower price, a limited product, etcetera.

Most businesses tend to generate FOMO in their customers to encourage them to acquire a product or complete a specific action, like subscribing to a newsletter or downloading an app. FOMO is commonly generated through advertisements through social media, Google, or email.

On the other hand, FUD is a feeling of distrust in the general conditions of a particular asset, considering its volatility and uncertain future.

Most of the time, FUD is beyond your control since it’s created by comments of the population, publications, or important people in the industry.

FUD can impact how traders work and value their investments and assets. No matter whether they’re trading the smallest unit of a Bitcoin or a big number of cryptos, FUD can affect the investment since it stirs up and spreads anxiety about the crypto project. 

If traders notice that a FUD feeling is dominating the scene and many clients are talking about it, they can make a bad decision regarding a particular token movement, losing a lot of money. Generally, traders should believe that a FUD story is real and be prepared for the worst scenario possible. However, they can also take advantage of FUD stories of other projects to buy low and sell high in the future. 

In general, FUD should open short positions when FUD impacts the crypto market. This way, they can manage fluctuations better and preserve the portfolio’s integrity.  

In the end, FUD can decrease investors' confidence not only in the overall cryptocurrency market but also in specific platforms where a particular crypto is traded. In the cryptocurrency realm, security holds immense importance, and traders must learn to a delicate balance between risks, expectations, fears, and hype.

Monitoring FUD is not easy. This practice requires a special sensitivity to changes in the users’ mood. Traders tend to check their social media and what other people are thinking to measure the level of FUD. 

The most common social media to monitor FUD is X. In Musk’s platform, users tend to be more honest and describe their concerns about crypto more straightforwardly. Discord’s channels are also a good source of information to monitor FUD since people participating there are commonly stakeholders of people who are interested in cryptos. 

Through a reliable conversation with people who witness the crypto phenomena, traders can understand what they are thinking of new releases. This way, they can also contribute to preventing disinformation and false data, and users from falling prey to scams.

At this point in the article, we agree that a negative sentiment can strongly affect a particular coin. No matter whether it is just small talk, word of mouth can spread negative feelings until the end of the Earth. However, smart traders must be capable of leveraging this situation and using this data to their benefit.

For example, if you know that the Chinese government is banning crypto – like it happened with Bitcoin – you probably will have to avoid this market and create a marketing strategy that entices crypto enthusiasts to your assets or portfolio by providing unique benefits and profits. 

What’s more! If you notice that trends indicate a drop in crypto prices, you probably want to sell your cryptos and rely just on short positions to navigate better possible losses. 

Besides, traders should be able to ignore some FUD stories since long positions, or HODLing –the acronym for “hold on for dear life”– can bring great returns despite the fact of being affected by ups and downs during the entire investment.

Remember that FUD stands for Fear, Uncertainty, and Doubt – feelings that can make it difficult for users to enter the crypto world. Eventually, it’s impossible to manage what people think of cryptos; thus, it’s relevant to know that FUD exists, which is fundamental to dealing with it. Skepticism will always be there, so face it with intelligence, patience, and security.