The abbreviation FUD is formed from the first letters of three words – fear, uncertainty, and doubt. These feelings lead people to sell cryptocurrency, causing its price to drop. FUD can also manifest in traditional markets, but its impact is particularly significant in the cryptocurrency market.

Most often, FUD in the cryptocurrency market arises due to:

• News or rumors about government regulation. This is an important feature of FUD – in some cases, it may be based on nothing more than rumors spread by someone.
• Criticism of cryptocurrencies by well-known individuals.
• A sharp drop in prices.

Since cryptocurrencies are still a new phenomenon, countries around the world continue to explore ways to regulate them. In some countries, they have the status of currency (as in Japan), in others, they are considered assets and are taxed (USA), while some countries impose numerous restrictions on them (China). If the status of cryptocurrencies worsens in any country, it can trigger FUD because people from that country will find it harder to buy them, limiting the market. If the country is large and influential, even rumors about future restrictions can cause unrest.

Statements by well-known individuals whose opinions are valued in the financial or IT sectors usually do not provoke such a strong market reaction but can still provide a significant push. For example, Jamie Dimon, billionaire and CEO of JP Morgan Chase – one of the largest banks in the United States – once stated that Bitcoin is a fraud and its bubble would result in significant losses for buyers. This caused the price of the leading cryptocurrency to drop by 6%.

Finally, a sharp drop in cryptocurrency prices itself leads to FUD: some investors lose their nerve and decide to cut their losses, while others aim to profit by buying at lower prices, accelerating the decline. The consequences can vary: sometimes the market recovers from such drops within days or even hours; in other cases, it may take much longer. FUD is not only about challenges but also opportunities since it provides good entry points into the market. As a result, anticipating FUD often becomes part of professional traders' strategies.