The Securities and Exchange Commission (SEC) has reissued its warning against the “Fear of Missing Out (FOMO)” behavior for cryptocurrency and other trending investments days ahead of the regulator’s decision regarding the fate of Bitcoin exchange-traded funds (ETFs).
SEC Warns against FOMO
In a tweet on Friday, the regulator highlighted “NO GO to FOMO,” adding that “just because others might buy a particular investment, doesn’t mean it’s the right opportunity for you.”
#SECInvestingResolution 5: Say “NO GO to FOMO” (fear of missing out). Just because others might buy a particular investment, doesn’t mean it’s the right opportunity for you. Learn more about finding out what’s right for you and your investing goals: https://t.co/fixDWoNFrF pic.twitter.com/SGf1z6xmhL
— SEC Investor Ed (@SEC_Investor_Ed) January 6, 2024
The US regulator first issued a warning against FOMO on 23 January 2021 in a blog post when the cryptocurrency and the stock markets were rallying upwards. Despite the red flag, Bitcoin and several other altcoins reached their peak values by November 2021. The regulator reiterated its warning in March 2022.
Although the recent alert did not mention any specific asset class, the original blog post named cryptocurrencies and meme stocks. Further, the timing of the notification points out the SEC’s concerns, as Bitcoin value is increasing in anticipation of the Bitcoin ETF approval.
The Regulator Explains FOMO
“We’ve all seen the increased interest in online investing and the explosion of digital assets and meme stocks. Understanding these kinds of investments may seem overwhelming,” the SEC’s blog post noted. “You may see your favorite athlete, entertainer, or social media influencer promoting these kinds of investment opportunities. Although it’s tempting, never make a decision to invest based solely on their recommendation.”
“And, just because others around you might be buying into these kinds of opportunities, it doesn’t mean you have to. Not every investment opportunity is right for everyone. Resist temptation and remember our phrase, ‘NO GO to FOMO’.”
Indeed, FOMO is a major factor when it comes to cryptocurrencies. Even the crypto companies consider FOMO while measuring market sentiment. And, the behavior takes over with the anticipation of any significant events.
The SEC is about to decide, either it will approve or reject, the Bitcoin ETF application of Ark 21Shares Bitcoin Trust before the 10 January deadline. Despite the ongoing years of rejections and delays, market optimism surrounds the regulator's stance this time.
The most important result of Bitcoin ETF will be that it dissuades or even prevents governments from the harshest potential treatment of BTC (such as the impulse to outright ban it). When 50 million boomers own it passively, the political and economic damage from a ban will be…
— Erik Voorhees (@ErikVoorhees) January 7, 2024
Anticipation has even pushed the prices of Bitcoin and other cryptocurrencies higher. Bitcoin recently crossed the $45,000 mark, its highest level in the last two years, only to correct and was trading around $44,000 as of press time.
This article was written by Arnab Shome at www.financemagnates.com.
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