A recent survey conducted by Kraken has shed light on the impact of emotional decision-making on US crypto holders. The study, which gathered responses from 1,248 investors, revealed that 63% believed their portfolios had been negatively affected by emotions such as fear of missing out (FOMO) and fear, uncertainty, and doubt (FUD).
The survey highlighted that a majority of participants had made decisions influenced by FOMO (84%) and FUD (81%). Interestingly, missing out on significant price surges was identified as the top emotional trigger for 60% of respondents, while only 17% feared missing price dips.
These findings underscore the significant role that emotions play in driving trading strategies in the volatile crypto market. As the crypto industry continues to gain traction and become a key part of investors’ portfolios, it is crucial to address the impact of emotional decision-making on investment outcomes.
FOMO, which is characterized by the fear of missing out on profitable opportunities, often leads investors to act impulsively, especially during market highs. The survey revealed that 58% of crypto holders frequently make decisions influenced by FOMO, with 26% occasionally succumbing to its effects.
On the other hand, FUD can cause hesitation or panic among investors, leading to missed long-term opportunities. Despite this, a significant number of respondents acknowledged that their reactions to these emotions had caused them to miss out on major gains.
The survey also highlighted age and gender differences in emotional investing. Investors aged 45 to 60 were the most likely to feel they had missed out on early gains (78%) but also expressed optimism about the future, with 74% confident in significant returns ahead.
Gender disparities were also evident, with men reporting more frequent decisions based on FOMO (66%) compared to women (42%). Male investors also expressed higher regret, with 70% believing they had missed out on major gains, compared to 48% of female respondents.
Social media emerged as a major influencer of trading behavior, with platforms like Twitter and Instagram significantly impacting portfolio decisions. The rapid flow of information on social media often amplifies FOMO and FUD, making it challenging for investors to maintain a rational approach.
Despite the challenges posed by emotional decision-making, a significant number of investors are adopting strategies to reduce impulsive decisions. The survey found that 59% of respondents use dollar-cost averaging (DCA) to make regular investments regardless of price fluctuations.
Other tools gaining traction include automated recurring buys, custom orders to target specific prices, and AI trading bots to eliminate emotional bias. These strategies help investors focus on long-term goals rather than reacting to short-term market movements.
Overall, despite the prevalence of FOMO and FUD, 84% of respondents remain hopeful about the future of crypto. Older investors, particularly those aged 45 and up, displayed the highest levels of optimism, with many believing that significant gains are still on the horizon.