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With the approval of a spot Bitcoin ETF expected on the horizon, the United States Securities and Commission (SEC) has warned users about investing in cryptocurrency out of fear of missing out (FOMO).
The educational arm of the SEC took to social media to post a warning about FOMO investment. The SEC Investor Education noted that an asset might not be worthwhile buying just “because others might buy” it. This is especially in the case of digital assets, including meme crypto tokens and non-fungible tokens (NFTs).
#SECInvestingResolution 5: Say “NO GO to FOMO” (fear of missing out). Just because others might buy a particular investment, doesn’t mean it’s the right opportunity for you. Learn more about finding out what’s right for you and your investing goals: https://t.co/fixDWoNFrF pic.twitter.com/SGf1z6xmhL
— SEC Investor Ed (@SEC_Investor_Ed) January 6, 2024
The “no go to FOMO” as an educational resource was posted first in the beginning of 2021 during the bull run. The sentiment was posted again in March 2022, more than a year later when the industry was heading into a quieter time and people were looking to sell their tokens.
“[Just] because others around you might be buying into these kinds of opportunities, it doesn’t mean you have to. Not every investment opportunity is right for everyone. Resist temptation and remember our phrase, “NO GO to FOMO.””
With the re-emergence of the warning at a time when the markets aren’t moving significantly, many believe this might be a sign that the SEC is looking to approve a spot Bitcoin ETF soon.
If the SEC approves a spot Bitcoin ETF, many analysts and experts believe that market will surge with an uptick in interest and adoption for digital assets. With this surge, there are fringe crypto assets that might look tempting with better prices and opportunities, but could pose a risk to investors.
The SEC’s resource directs investors to healthier investment practices, including paying attention to what the markets are doing rather than what influencers and celebrities are saying. The SEC also points to diversification as a good practice for investing more safely:
“The best way to protect yourself during market swings is to create an investment portfolio that has a mix of assets, such as stock, bonds and cash. Including different kinds of assets in your portfolio reduces risk and the impact of volatility on your overall portfolio.”