Potential cryptocurrency investors must have had several deer-in-headlights moments as they emerged from the box containing traditional investment information and stepped forth onto the road of possibility that blockchain technology and cryptocurrency lays out before the adventurous.
The cryptocurrency media landscape is littered with the bodies of dueling headlines: “Bitcoin plunges… ” regularly clashes with “Bitcoin price reaches record high,” and “Ethereum price crashes…” wrestles with “Ethereum gains 3000%” for top billing in the 24-hour news cycle on both crypto news sites and mainstream outlets that are not yet sure whether cryptocurrency is revolutionary or malicious.
All of the attention has led to skyrocketing interest in cryptocurrencies from the crypto-curious to serious investors, and even governments. It has attracted complementary and competitive interests to the cryptocurrency investment ecosystem, including those who seek to make a fast buck as well as those who see long-term value in crypto investment and encouraging innovation in cryptocurrencies.
There is no shortage of hot takes explaining both the surges and declines in fiat valuations of cryptocurrencies, but there is no doubt that FOMO (fear of missing out) accounts for a good deal of price escalation. Chris Burniske, co-author of the recently released Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond, noted in August that the increased frequency of Google searches for “bitcoin” correlated closely with rises in its valuation:
— Chris Burniske (@cburniske) August 12, 2017
Omkar Godbole noted in an article at Coindesk that Bitcoin’s remarkable rise to record values has been fed by, and feeds, search interest and FOMO investors.
Just as FOMO plays its part in valuation increases, “panic selling” contributes to subsequent price slides. If you are a recent adopter (whether succumbing to FOMO or not), you’ve no doubt kept one eye on those headlines wondering which ones mean “buy” and which mean “sell,” and which mean “hold.”
After all, the casual investor has heard from, or about, the likes of JP Morgan CEO Jamie Dimon, “Shark Tank’s” Mark Cuban, the Chinese government, U.S. national security specialists and lawmakers, and even one Saudi prince – not to mention blaring headlines about North Korea dodging sanctions, Venezuelans circumventing crippling inflation, and Japan enthusiastically adopting cryptocurriences … all in the last several months.
Negative headlines usually provoke far more clicks than the positive. This is a factor in the struggle cryptocurrencies face to establish themselves as worthy investments with the general public. A few skeptical words from well-known financial market movers about the soundness of cryptocurrency throws up red flags in the minds of the crypto-curious and may also incite panic in those who have already dipped their toes in the water. The fear of losing money is the most powerful motivator in panicky stampedes by new investors.
Those placing trust in government entities or Fortune 500 CEOs for advice in cryptocurrency investment have been likely contributors to intraday valuation charts that look like this:
Image credit: CoinMarketCap.com/ Sept 12-Sept 13 – Jamie Dimon calls bitcoin a “fraud”
Nevertheless, there is a steady stream of less sensational news and more balanced voices buoying the cryptoeconomy, and they appear to be drowning out the nay-sayers. For proof, dig deeper than the trending headlines about a Saudi prince’s prophecy of crypto-doom, to discover ones like, “LedgerX Trades $1 Million in Bitcoin Derivatives in First Week,” and “Bitcoin is breaking all kinds of price records in cash-strapped Zimbabwe.” It helps explain why zooming out a little provides you with a picture like this: