A term that is very common in cryptocurrency-related forums and online communities. What does it stand for and what is its aim?
What is FUD?
FUD stands for Fear, Uncertainty, and Doubt. The term is used when an individual is attempting to create a negative state of mind to other investors by presenting unreliable data that show an upcoming price drop in one or more cryptocurrencies.
Many new investors tend to get confused with the term as it often gets mentioned in cryptocurrency-related forums. To understand what is FUD and the context in which it is used, it is important to remember that one of the most important price drivers for the crypto market is that of collective sentiment. This is certain people and institutions will use it strategically to profit from price swings.
Who uses FUD and why?
It has been observed that FUD is often spread to the public by large media channels and influential personalities. Their goal is to lower the demand and purchasing power in order to either stabilize or cause a drop in a coin’s price. Essentially, one could compare FUD with fake news or barely relevant news that is “blown out of proportion”.
FUD in the context of cryptocurrency
Many media outlets that focus on creating clickbait content will publish news that refers to Bitcoin as a “bubble” or a tool used for “illegal activities”. These claims, of course, come without any substantial evidence and their only aim is to get more traffic to their website. The same principle applies to TV channels, articles published by several financial institutions, and other parties that can benefit from the public’s emotional response.
Cryptocurrency FUD example
One of the most common FUD examples was observed a few weeks ago, when Scott Minerd, CIO of Guggenheim attempted to “scare” retail investors by adjusting his bitcoin price prediction. The businessman who had formerly called for a $400.000 BTC price on live television, retracted his statement trying to make the public believe that the price would drop back to $20.000 levels. His opinion was changed again after Guggenheim got the permission to invest in Bitcoin – his updated prediction was instantly elevated to $600.000 per coin. This example should help you understand what is fud crypto misinformation and how it leads to what is more commonly known as herd mentality.