What is FUD

FUD is an acronym for “Fear, Uncertainty, and Doubt” – Baseless negativity spread intentionally by someone that wants the price of something to drop.

It originated in the marketing world, where it is used to make a competitor’s product look bad when your own can’t compete. The FUD technique has historically been a weapon of large companies to crush smaller and more innovative competitors.

FUD in the crypto world is an acronym that stands for fear, uncertainty, and doubt. As the words behind the abbreviation suggest, it encompasses negativity about the cryptocurrency space in general. Usually baseless, it’s a tool used by naysayers to jumpstart or amplify negative market sentiment and impede on mass adoption. And just like fake news in geopolitical events, FUD can directly impact the cryptocurrency market and its development.

However, understanding what is FUD is merely a starting point. If you are trying to analyze the markets, you need to not only be able to define FUD but also try to understand how it’s created. In this post, we will give you a definition of the FUD crypto slang, but also teach you how to detect it and give you some clear examples of recurring FUD in crypto.

Finally, we will share some useful tips on how to keep your head cool during periods of mass FUD and make the best out of it as an investor.

What is FUD? What Does FUD Mean?

As a fairly recent financial asset, people are only starting to understand Bitcoin’s applications and ramifications into the monetary paradigm of yore. There’s still a major misunderstanding on how cryptocurrencies work, what they represent, or whether they are some sort of elaborate scam or not. This makes digital assets incredibly volatile, especially when compared to other commodities like gold.

And just like commodities, the major driving force behind the price of cryptocurrencies is supply and demand. While either of these can be impacted by various factors, two мајор influencers of supply and demand in crypto are FUD and FOMO.

FOMO stands for fear of missing out, while FUD is the lingo for fear, uncertainty, and doubt. The former stimulates a gold rush towards the crypto market, while the latter usually instigates panic sell-offs and price drops.

What Does FUD mean in Cryptocurrency?

So, what does this fearmongering really mean? Well, FUD usually presents itself in the form of general negativeness about cryptocurrencies. It can target one particular cryptocurrency like Ethereum, or attack a broader spectrum of the ecosystem, like DeFi or NFTs. Moreover, FUD can come from all sides, not just the media.

Social media, with Twitter at the forefront, is a common tool for spreading FUD. And since most crypto enthusiasts source their information from Twitter, the impact is often non-negligible. In the short term, negative news and views about cryptocurrencies can push their prices downwards, especially when spread on a mass level.

How does FUD impact the markets?

Crypto assets remain widely unregulated аnd their price stability mainly relies on market sentiment. Because of this, the crypto community believes in a narrative that FUD is usually fabricated at a greater scale. A conspiracy theory running on forums and crypto Discord groups is that governments and institutions push for a generally negative view of the crypto space.

We can’t really blame them, as FUD usually comes at very opportune moments – when the market is in a severe upswing or downswing for example. While market manipulation is nothing new, the lack of regulation amplifies this aspect in the crypto markets, specifically.

The cryptocurrency market is led by BTC, and most altcoins follow its lead when it comes to a coin’s price action. Consequently, major FUD is usually targeted at the market leader and seeks to discredit it or make it look bad. Over the years, the impact of such news pieces that paint a bleak picture of Bitcoin has significantly diminished. While the short-term impact on price can be significant, recovery is almost always on the way shortly thereafter.

Examples of FUD in the Crypto Markets

Some forms of FUD come up ever so frequently, that they warrant a mention in this article. Let’s have a quick rundown on some of them, which will help you spot them from afar when browsing the crypto news.

  • Bitcoin will die. Usually spread by big-name skeptics like Nouriel Roubini or Peter Schiff, this type of misinformation attempts to paint Bitcoin as a fad that will lose its appeal at some point. As a result, the original crypto’s value will reach zero, and everyone involved will experience financial consequences. However, history has shown us that this is but a pipe dream. Moreover, with institutional interest in Bitcoin and crypto rising, we can assuredly say that this will never happen. 99Bitcoins has even mapped all these BTC obituaries on their website, with more than 400 occurrences, and counting.
  • China (or any other country) bans crypto. Those that follow the crypto news have seen this news piece multiple times over the years. Every bullish cycle, the Chinese government announces some form of ban on cryptocurrencies, and this has happened in 2013, 2017, and 2021. Worth noting is that on neither occasion, this ban hasn’t had a long-lasting impact. And also, it makes you wonder, how many times can you ban the same thing all over again?
  • Regulation woes. As we mentioned earlier, crypto is mainly unregulated. Governments all around the world are pushing towards some sort of regulation, and that is not a bad thing in itself. It will ultimately make the crypto ecosystem a safer place for investors. Although it takes away some of the freedom that we are accustomed to.

All in all, you can see a pattern here. FUD is usually an irrelevant piece of information that is blown out of proportion to cause panic in the market.

How To Detect FUD?

As you might have noticed by now, FUD has a goal to discredit the blockchain space and cryptocurrency market as a whole. For example, the media will present Bitcoin as an elaborate scam or Ponzi scheme, without providing any basis on these findings. Anyone that has researched Bitcoin’s proof of work beforehand will immediately know that is impossible. However, for the mainstream investor, this might sound true. It would prevent them from adopting cryptocurrencies as a medium of exchange or investment instrument.

So, how do you go around the fake news and make a mind of your own about upcoming events? There are a few surefire ways to do this, including:

  • Do your own research. Don’t fall for pro-or-anti crypto propaganda. Before you succumb to FUD, try to assess whether the statements are true and are backed by sound data.
  • Avoid sensasionalist media. Websites will go a long way to get ad revenue from clicks. Clickbait titles fuel social sharing but are often unsubstantiated.
  • Strip yourself from assumptions. Ask yourself whether the news will have a real impact on the cryptocurrency sphere and what the situation really affects.

To sum up, always make sure to inform yourself from relevant sources and stay away from misinformation.

Wrapping Up

So, that wraps up our short definition of the FUD cryptocurrency slang. This should help you see it coming a mile away and act accordingly. Remember, although often groundless, FUD can impact prices severely. There’s no reason for bagholders to hold onto their portfolio for dear life if they think the price is going to tank. You can exit the market temporarily and protect your gains. Just remember that when reentering, be careful of crypto shills endorsing various cryptocurrencies that might lure you into pump and dump schemes.

Finally, make sure you don’t share the FUD. Such news is specifically created to entice social sharing. Try to detect it in time and resist the urge of sharing unfounded data.