A recent survey conducted by Kraken has shed some light on the impact of emotional decision-making on the portfolios of US crypto holders. According to the survey, 63% of respondents believe that their emotions have negatively affected their investment decisions, with fear of missing out (FOMO) and fear, uncertainty, and doubt (FUD) playing a significant role.
The survey, which gathered responses from 1,248 crypto investors, revealed that a whopping 84% of participants had made decisions influenced by FOMO, while 81% had acted on FUD. The fear of missing out on significant price surges emerged as the top emotional trigger for 60% of respondents, compared to 17% who feared missing out on price dips.
These findings highlight how emotions continue to drive trading strategies in the volatile crypto market, especially as cryptocurrencies become an increasingly important part of investors’ portfolios.
FOMO, the anxiety of missing a profitable opportunity, often leads investors to act impulsively, particularly during market highs. The survey showed that 58% of crypto holders frequently make decisions influenced by FOMO, while 26% occasionally succumb to its effects. On the other hand, FUD causes hesitation or panic, with many investors admitting that their reactions to these emotions have caused them to miss out on long-term opportunities. In fact, 88% of respondents felt they had missed out on major gains.
Age and gender differences also play a role in emotional investing. Investors aged 45 to 60 were the most likely to feel they missed out on early gains (78%), but they were also the most optimistic about the future, with 74% expressing confidence in significant returns ahead. Gender disparities were also evident, with men reporting more frequent decisions based on FOMO (66%) compared to women (42%), and higher levels of regret about missing out on major gains.
Social media emerged as a major factor influencing trading behavior, with platforms like Twitter and Instagram playing a significant role in shaping market insights. Among respondents who relied on social media for information, 85% reported significant portfolio impacts from emotional trades. The rapid flow of information on these platforms often amplifies FOMO and FUD, making it challenging for investors to maintain a rational approach.
Despite the challenges posed by emotional decision-making, many investors are turning to strategies designed to reduce impulsive decisions. The survey found that 59% of respondents use dollar-cost averaging (DCA), a method involving 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, helping investors focus on long-term goals rather than reacting to short-term market movements.
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 still lie ahead.
Overall, the survey highlights the importance of managing emotions in the crypto market and adopting strategies that prioritize long-term goals over short-term fluctuations. By staying informed and disciplined, investors can navigate the volatile crypto landscape with confidence and optimism.