FOMO is an acronym that means Fear Of Missing Out,” which is a sentiment of anxiety that traders feel when they think they are missing out on a good trading opportunity or a profitable crypto investment.
FOMO stands for "Fear Of Missing Out" and refers to the anxiety that traders might experience when they think they are being cut off from the market, missing a potential investment opportunity.
FOMO can drive investors to make rash and harmful decisions and buy a coin or token without adequately researching the investment and the project. This term is often used to describe the behavior of investors during market bubbles when prices are rising rapidly, and traders feel pressure to invest their money before they miss out on the opportunity to make a profit.
A practical and typical example of FOMO could be a new token launch or airdrop. Traders can get caught up by the FOMO investing massive amounts directly without having previously studied the project in detail and carried out all the research (DYOR or Do Your Own Research).
According to psychology, most traders experience FOMO near the top of a bull run when the market sentiment is positive, and prices rise. Additionally, FOMO can occur in pump-and-dump schemes, where malicious actors convince investors they are missing out on massive profits and get them to invest (a sort of rug pull scheme based on hype, as happened for the SQUID token).
The common feeling experienced when investors are FOMO-driven can be
constant obsession with the open position
an extreme need to follow social media news to don’t miss the right trends
making hasty investment decisions based on price movement or shared sentiment.