A recent survey conducted by Kraken has shed light on the impact of emotional decision-making on US crypto holders. According to the survey, 63% of respondents believe that emotions such as fear of missing out (FOMO) and fear, uncertainty, and doubt (FUD) have negatively affected their investment portfolios.
The survey, which gathered insights from 1,248 crypto investors, revealed that a significant majority (84%) have made decisions influenced by FOMO, while 81% have acted based on FUD. The fear of missing out on price surges was identified as the primary trigger for emotional decision-making, with 60% of participants expressing this sentiment compared to 17% who feared missing out on price dips.
These findings highlight the crucial role emotions play in shaping trading strategies in the volatile crypto market, highlighting the increasing importance of cryptocurrencies in investors’ portfolios.
The Impact of FOMO and FUD
FOMO, which stems from the fear of missing out on profitable opportunities, often drives investors to make impulsive decisions, especially during market highs. The survey found that 58% of crypto holders frequently make decisions influenced by FOMO, while 26% occasionally succumb to its effects.
On the other hand, FUD leads to hesitation or panic among investors. Despite this, many respondents admitted that their reactions to these emotions had caused them to miss out on long-term opportunities, with 88% feeling they had missed out on significant gains.
Differences in age and gender also play a role in emotional investing. Investors between the ages of 45 and 60 were most likely to regret missing out on early gains (78%), but also expressed optimism about future returns, with 74% believing in significant gains ahead.
Gender disparities were evident as well, with men reporting more frequent decisions based on FOMO (66%) compared to women (42%). Male investors also expressed higher levels of regret, with 70% believing they had missed out on major gains, in contrast to 48% of female respondents.
The Influence of Social Media
Social media platforms, such as Twitter and Instagram, emerged as significant influencers of trading behavior. Among respondents who relied on these platforms for market insights, 85% reported experiencing significant impacts on their portfolios from emotional trades.
The rapid dissemination of information on social media often amplifies FOMO and FUD, making it challenging for investors to maintain a rational approach. Despite these challenges, many investors are adopting strategies to reduce impulsive decisions, with 59% using dollar-cost averaging (DCA) and other tools like automated recurring buys, custom orders, and AI trading bots to eliminate emotional bias.
While FOMO and FUD remain prevalent, 84% of respondents remain hopeful about the future of crypto. Older investors, especially those aged 45 and above, displayed the highest levels of optimism, with many believing that significant gains are still on the horizon.
