Three words better known as FUD. I’ve been at this crypto game for 4 months next week and in that time I’ve really started to see FUD become a mainstay of investing. Unlike ‘real’ investment, cryptocurrency can be severely affected by the slightest hint of FUD from someone perceived as influential.
CRYPTOCURRENCIES ARE NOT SPORTS TEAMS
Jamie Dimon
My first experience of FUD came from the CEO of JPMorgan Chase. As an outsider, you would perceive the advice of a principal banker to be important and when he says bitcoin is a scam you’ll probably listen to him. Better still, if you had just bought your first fraction of a bitcoin, you would probably start to feel nervous and dump it all back into fiat, lowering the overall value of bitcoin. You would subsequently be surprised if JPMorgan Chase then made a sizeable purchase into the bitcoin market in the following days, but they did. A point to remember: market manipulation is illegal, in a regulated market.
This week, Mr Dimon has come out and said he regrets calling bitcoin a fraud and blockchain technology uptake is on the rise.
Reddit
Most millennials use Reddit and if you’re new to crypto, r/cryptocurrency is probably a good choice. Or is it? The top posts are FUD. People post something to FUD a particular coin and others comment. The more comments, the higher up it goes until it’s at the top for everyone to see. Cryptocurrency is still very much in its early days and the slightest hint that a coin is connected to ‘vapourware’ the more likely the FUD will stick and the price will plummet accordingly.
Of course it goes both ways. Constant hype only leads to a desensitisation to real news. A compendium could partner with Warren Buffet and it might not affect the price if buyers don’t care either way. Cryptocurrencies are not sports teams. You might have a favourite, but there are others.
Twitter could be the worst of them all. Accessible to everyone. If you’re going to follow [insert coin name here] Whale, assume whatever they say is in their own interest. A whale will FUD a coin after they’ve dumped their stake and buy back after you react to it. It’s pretty basic, but assuming most people don’t access these things, it makes sense. The moment they see that red candle, they sell. In many ways FUD from whales can be seen as a good thing. It means they believe the price of that coin will increase. John McAfee is the worst one. He never expressly says he has investments in particular coins but 665k followers will hang on his every word. His coin of the day picks lasted less then a week before people called him out for manipulating the market.
Cryptocurrency is unregulated and market manipulation comes with the territory. If you’re aware it can happen then you’ll keep a stronger hodl on your coins. Remember to buy the rumour and sell the news.
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