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Fear, uncertainty and doubt (FUD) is a common tactic used to manipulate investor and consumer emotions. It can come in the form of rumors, adverse facts, false news stories or any other piece of information that a person or group can use to their advantage. For instance, short-sellers may use FUD to drive down the price of a stock.

The phrase has been around for decades and the acronym has been popular since at least the 1970s. In recent years, it’s most often been heard in the cryptocurrency community.

Here’s what FUD means in the context of investing in stocks and crypto and how to protect yourself from it.

FUD in crypto

In the crypto market, FUD is particularly prevalent due to the newness of the digital asset and the potential for misunderstanding the underlying technology. Fear of security breaches, increasing regulations and rumors play a part too. These factors can lead to huge market swings as investors abandon their positions in response to negative headlines. For instance, in recent years the implosion of several exchanges and the high prevalence of fraud, such as rug pull schemes, have induced plenty of FUD.

FUD in stocks

While FUD is common in the crypto market, the term was first used decades ago to represent the potential for investors to succumb to anxiety or pessimism that affects their decision-making. FUD is sometimes used to describe investor activity in the stock market, but it’s now more common in the acronym-heavy crypto community.

Like in crypto, FUD in stocks can be spread through social media or mass media, and it can influence trading decisions. “Investors hate uncertainty, and along with fear or doubt, can prompt a wave of ‘sell first, and ask questions later.’ Especially turbulent times in financial markets can be chalked up to this, but at the same time it often proves to be an attractive buying opportunity for disciplined, long-term investors,” says Greg McBride, chief financial analyst for Bankrate.

FUD vs. FOMO

FUD may be spread in real life or on social media, but the fear of missing out (FOMO) is a different type of FUD. FOMO refers to the fear of not benefiting from something others are enjoying. For example, if a stock is soaring and investors are seeing big returns, a FOMO investor may fear that they are missing out and invest in the stock even though it may be overvalued. In the higher-volatility crypto market, FOMO is even more dangerous, as investors may feel like they are missing out on opportunities for quick gains.

How to deal with FUD

FUD can come from various sources and can target any aspect of the market. Some FUD-inducing factors include security breaches, regulations and rumors. For starters, investors can protect themselves by verifying the source of any information and evaluating the potential impact on their investments.

Additionally, investors will have an easier time combating FUD if they follow professional investing guidance rather than relying on unofficial news sources and social networks for advice. Maintaining investment discipline and staying with a strategy for long-term gains are also helpful.

Of course, the core of dealing with FUD is avoiding rash decisions fueled by fear. Instead, investors should consider their risk tolerance and investment horizon, evaluate the potential of the industry and the company, and then make a decision.

Other types of popular crypto slang

FUD is not the only acronym handy to know. The cryptocurrency market has long been known for its innovative jargon and heavy use of acronyms.

Some of the more common ones are:

HODL
This term means “hold on for dear life” and is used to encourage investors to hold onto their investments.

Sats
Short for Satoshis, sats are the smallest unit of Bitcoin and are named after the purported developer of Bitcoin, Satoshi Nakamoto.

DYOR
“Do your own research,” as in investors shouldn’t rely on the hype behind a token or its creators, but rather evaluate for themselves the project’s potential.

Ape
Investors use this term to refer to someone purchasing an NFT or token without researching it.

Bagholder
Someone who holds onto a losing investment is called a bagholder. For example, if a crypto asset decreases in value, the investors still holding onto it are called bagholders.

Scam coin
A scam coin is a fake cryptocurrency created to scam investors. It may be presented as a new crypto asset with a highly promising project or company.

Rug pull
A rug pull can be a scam coin, but not always. This type of crypto fraud can also include pump-and-dump schemes, where a project or coin is highly inflated and later sold off in high quantities by the creator.

Bottom line

FUD has long been used to manipulate investor sentiment in the stock and crypto markets. Investors should be aware of this and take a measured approach when evaluating potential investments. By staying informed and following trustworthy guidance, investors can better protect themselves from the negative influence of FUD and make wise decisions that are based on sound research and risk management.