FOMO-fueled crypto rally puts a nail in the innovation coffin?

  • 11 July 2019, Thursday, 18:40

The past decade witnessed huge technological eruptions in the cryptocurrency industry. Bitcoin and its peer altcoins, still in its infancy, posted the most gains throughout the years. The price swings of these digital coins, from a few cents to thousands of dollars in a blink of an eye, attracted many who entered the space purely because of FOMO.

“Fear of Missing out” or FOMO has dominated the space in its initial days and continues to make crypto-traders around the world jump on to the trend bandwagon. While FOMO does help garner attraction to the market at the initial phase, in retrospection, what it does is, basically, curtail an enormous potential of exponential growth.

The haste to strike when the iron is hot drove the prices of Bitcoin in 2017. Soon after the traders started selling their Bitcoins to make profits, the valuation went down crashing.

As Bitcoin neared $20k [in Dec 2017] and the fear of missing out on the opportunity kicked in, people turned to the volatile market in awe. According to sources, the number of ICOs that came into the picture in 2018 was double than the previous year, most of which decayed due to various reasons. Notably, there were a few promising ICOs that pulled major exit scams which led angry and worried users to dump their crypto tokens and exiting the space altogether.

2018 was a year filled with failed projects, scams, and investors and enthusiasts losing faith in the industry that was fueled by the FOMO fever just the previous year.

The robust scale in Bitcoin’s price this year tripling from the lows that the “digital gold” posted last year, prompted institutional foray into the space via their respective in-house projects. Even Google Trends and several other independent reports cited a growing interest in Bitcoin after the flashy unveiling of the Libra project. And the latest crash, which was speculated to have induced from the Federal Reserve Chairman Jerome Powell’s remark concerning Facebook’s Libra Project, was again a careless case of pump and dump.

More recently, Wietse Wind tweeted a much-needed clarification along the same lines. Referring to the latest XUMM roll-out and the expectation of the community members on XRP’s price, XRPL Labs’ Lead Developer, Wietse Wind wrote that the launch would be “one of the many” things that would scale the ecosystem, utility, use cases, but one cannot expect a “big bang” effect on the token’s price. And any effect on its price, according to Wind’s opinion is “bad”.

It’s not just the individual coins’ prices that matter, but the ecosystem that is building it, the underlying innovative tools and tech that has the ability to disrupt legacy inefficiencies. The common notion being, a development in the network of a particular coin would potentially drive its prices, is flawed. A major pullback from potential investors is what happens after a FOMO dies out and this is what triggers volatility in the space.

The concept of “an upgrade/update should lead to a price surge” and if that does not materialize, “dump your assets, the tech is probably not good enough”, is based on flimsy short term goals, clearly undermining the long term impacts.