How to Effectively Beat the FUD Factor in Crypto Markets

As a result of market conditions, crypto enthusiasts experience a range of emotions. During a bull market, the value of most cryptocurrencies skyrockets, instilling fear of missing out in investors. FOMO is an acronym for “Fear of Missing Out,” which causes crypto enthusiasts to buy “appearingly promising” cryptocurrencies without conducting adequate due diligence. This can sometimes be detrimental to their cryptocurrency portfolio. 

As a result of FOMO, some unlucky crypto enthusiasts end up holding tokens that have little or no liquidity and value. Fraudulent projects take advantage of FOMO by tricking crypto enthusiasts into purchasing native tokens through a pump and dump scheme.

Unsuspecting investors may feel that the rising value of a token may be steady; unknown to them, the moment it gets to a certain threshold, the project’s creators will flood the market with the token, forcing the price to fall after they have cashed out. Victims are then left with worthless tokens that no one wants to purchase.

FOMO, in most cases, is the polar opposite of FUD, which is the acronym for Fear, Uncertainty, and Doubt. In the case of FUD, investors may sell their tokens prematurely or stop using a crypto platform due to misinformation. 

This article defines FUD, discusses how to combat it, and outlines the steps industry giants such as KuCoin are taking to reduce FUD in the cryptocurrency market.

What is FUD? 

FUD is the acronym for Fear, Uncertainty, and Doubt. This is a method used by some individuals to try and destabilize the market conditions by spreading false information. Usually, FUDders create false information and spread it to get individuals or investors in a market to behave erratically. Suppose some individuals want to cause the price of a token to drop for any reason; they could intentionally spread wrong information about the token or the company that released it. 

If they want to stop investors from using an exchange, they could spread malicious information about the crypto exchange. This usually leads to a market crash while manipulating investors and traders into avoiding a cryptocurrency or crypto firm. 

It is important to note that FUD is not only present in the crypto market, as it can be seen in any financial market.  

The effects of FUD? 

FUD negatively impacts the target organization or cryptocurrency. It may result in investors avoiding the cryptocurrency and flooding the market with it, leading to a drop in the value of that token. Users may discontinue using an organization’s services. If it is an exchange, users may withdraw their assets, which can destabilize it. 

How to Deal With FUD?

Both organizations and individuals can engage in a variety of activities to combat FUD and its consequences. 

Education and steady flow of information

A crypto organization can deal with FUD by appropriately educating the community about the features it provides and its current state. This should be done in a way easily understood by the community. Keeping the community informed regularly reduces the likelihood of FUD spreading. 

Public Relations

The moment signs of FUD appear, it is crucial that the targeted crypto organization immediately dispels it to prevent it from spreading. The crypto firm should instantly counter the misinformation through its PR team. 

Do Your Own Research (DYOR) 

Individuals can be negatively affected by FUD. They can be manipulated into selling their tokens at a loss. To combat this, it is crucial to conduct due diligence before making any purchase or sale in the crypto market. Following the bandwagon may be disastrous. 

Individuals are advised to invest only assets they can afford to lose. Taking out a loan and using one’s home as collateral while investing the proceeds in the cryptocurrency market may not be a wise decision.

What is KuCoin’s Anti-FUD Fund?

KuCoin, in July 2022, announced through its CEO, Johnny Lyu, that it was launching an Anti-FUD Fund to combat FUD in the cryptocurrency space.

The KuCoin Anti-FUD Fund is a scheme devised by KuCoin to reduce the occurrence of FUD in the crypto space, particularly since it is primarily the result of misinformation. 

Lyu stated, “FUD only benefits the FUDers. It deceives investors and harms the industry’s reputation and market confidence.”

The CEO of KuCoin, through his Twitter page, had informed the crypto community about the new fund’s objectives. 

The primary objectives of this fund are divided into three categories, which are discussed below. 

Firstly, the Anti-FUD Fund will focus on improving anti-FUD education for those inside and outside the crypto community. The educational activities will be conducted online and offline. The education program will be available in over twenty languages, allowing people from all over the world to participate. The Fund will support the development of this program, allowing individuals to have access to the necessary knowledge concerning the meaning of FUD, how to spot them, and much more. 

Secondly, the Fund will focus on rewarding the influencers and thought leaders in the crypto space that are known for “delivering trusted information to their audiences, and helping them stay away from FUD.” 

Thirdly, the Fund will focus on tracking down FUDders that “intentionally spread FUD and take legal action against them if needed.”

Why Was KuCoin’s Anti-FUD Fund Created? 

The genesis story behind the Anti-FUD fund is linked to a serious case of FUD surrounding the notable crypto exchange, KuCoin, when some Twitter users claimed that the exchange was secretly insolvent and had hidden plans to halt withdrawals. 

The Terra debacle had a significant negative impact on the crypto space. Before the crash of the Terra ecosystem, the native token of the blockchain, LUNA, ranked sixth in terms of market capitalization, according to CoinMarketCap. Terra drew the attention of several crypto firms due to its notable features, including the algorithmic stablecoin, UST, and the high-interest rate provided by Anchor Protocol.  

The decline in the value of TerraUSD impacted the value of LUNA, causing it to crash as well. The Terra protocol designed the TerraUSD architecture to be linked to the Anchor Protocol. 

Anchor Protocol began by offering crypto enthusiasts a 20% interest rate on TerraUSD deposits. This was one of the factors that drove up demand for UST. Anchor Protocol, in March 2022, decided to modify its interest rate from 20% to a floating rate, which prompted some users to flood the market with UST and LUNA (now LUNC).  

Since UST was designed to be an algorithmic token, its value was determined by the market. The value of the stablecoin was depegged and crashed precipitously, taking LUNA (now LUNC) with it. 

The aftermath of the crash was massive. Several lawsuits were filed against Terra’s founder, Do Kwon, and various allegations were made. 

The Terra fiasco, coupled with the poor crypto market conditions, negatively affected some notable crypto firms such as Voyager Digital and Celsius. Because of insolvency issues, both organizations have halted asset withdrawals by their users. They were eventually forced to declare bankruptcy.

The effect of the Terra crash trickled down to other firms. After the news of crypto firms like 3AC facing bankruptcy for their $200 million exposure to LUNA, the CEO of FTX disclosed that some crypto exchanges were experiencing difficulties. 

According to reports, “after throwing lifelines to troubled digital currency platforms BlockFi and Voyager Digital, Sam Bankman-Fried, the 30-year-old billionaire founder of FTX, warns that some crypto exchanges will soon fail.”

The alleged statements of Sam Bankman-Fried spread quickly on social media, especially Twitter, with some users trying to guess which exchanges were allegedly insolvent and about to close up shop.  

Some popular members of the crypto Twitter community, such as @KongBTC, a crypto trader, and @otteroooo, a blockchain investigator, identified KuCoin as the alleged crypto exchange that was about to close shop. They advised their followers to withdraw their assets from KuCoin and move them elsewhere, claiming that the exchange, like their embattled counterparts, would halt withdrawals. 

This led to FUD, and several users began withdrawing their assets from KuCoin, claiming they would no longer use the exchange until further notice. The CEO of KuCoin, Johnny Lyu, tried to dispel the rumors, claiming that the exchange was solvent and had recently completed a $150 million funding round, increasing the exchange’s valuation to $10 billion.  

After the FUD surrounding KuCoin had subsided, Lyu announced that the exchange was establishing an Anti-FUD Fund in response to the disastrous effects of FUD in the crypto market, which was primarily caused by misinformation.

In Conclusion,

• FUD is an acronym for Fear, Uncertainty, and Doubt. This is a method used by some individuals to try and destabilize the market conditions by spreading false information.
• FUD negatively impacts the target organization or cryptocurrency.
• KuCoin, in July 2022, announced through its CEO, Johnny Lyu, that it was launching an Anti-FUD Fund to reduce the cases of FUD in the crypto space.
• The Fund will support numerous activities to reduce FUD in the crypto space, such as mass education and legal action against FUDders.

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