FUD is an acronym that stands for Fear, Uncertainty, and Doubt and refers to the negative dissemination of information, often in an exaggerated or misleading form, intended to sway public opinion or to create upheaval. Within the sphere of cryptocurrencies, FUD can have a negative effect on the prices that will dip down since the investors are reacting with emotions to the rumors, discussions, and frightening headlines.
There are numerous potential channels of FUD, those may include news articles, social media, known personalities, rival projects, and even groups acting together to manipulate the market. At times, the fears have some basis in truth like regulatory actions or hackers stealing cryptocurrencies. Other times, the FUD is purposefully targeted at forcing people to sell off their coins/tokens which are then bought by others at reduced prices.
Whenever the FUD is on the move, traders could be forced to panic-sell thus bringing down prices even when there has not been a fundamental change regarding the project. This type of reaction is capable of leading to sudden and short-lived market declines. The professional investors’ strategy is to distinguish genuine concerns from distractions and then to measure whether the information is fact-based or merely an emotional trigger.
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To call something “FUD” in everyday conversation is to imply that the allegations are groundless and aim at instilling fear rather than providing a useful insight. In general, FUD is the emotional.