FOMO Effect Once Again Ripples Through Crypto World

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FOMO Effect Once Again Ripples Through Crypto World

“The FOMO effect is once again rippling through the crypto world, bouncing the price of Bitcoin near all-time highs.

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Investors Are Feeling The FOMO Effect

It gained $2,000 dollars in just two hours earlier today as it surged back up towards yesterday’s record level above $66,930.

Speculators are fearful of missing out on future price gains, amid expectation that the green light given this week to the Bitcoin futures ETF in the US will swing open the saloon doors to more entrants into the crypto Wild West. The move does seem to have added more legitimacy to Bitcoin, despite the fact that trading in futures contracts and speculating where the price will go next may be even more risky and expensive than trading right now in crypto currency on an exchange.

Given that the UK’s Financial Conduct Authority banned crypto EFTs as of January this year, it’s unlikely we will see any moves in the UK any time soon.

The FCA has been nervous about the number of retail investors risking their money in the crypto sphere for some time. It’s now worried the volatile nature of the coins and tokens could blow up in the face of the financial sector with more institutions piling in.

UK Regulators appear to be holding fire right now as proposals to set up at central bank digital currency known as BritCoin are investigated and assessments made about the impact on the commercial banking system.

Fresh Regulation

We do expect fresh regulation to limit banks and hedge funds exposure to crypto to be introduced, which could be along the lines of the Basel Committee recommendations for financial institutions to be forced to set aside a buffer of up to 100% of money invested in crypto assets to protect against future losses.

Giving crypto assets a high-risk price tag may help limit contagion if they sharply fall in value, but central banks and regulators are on a tricky tightrope. If new rules are too strict, they risk quashing innovation in the rapidly developing decentralised finance world.

If investors are feeling the FOMO effect, they should only dabble with crypto currencies at the edges of their portfolios with money they can afford to lose.

Also as these are US domiciled ETFs, HL would not be able to offer them. US ETFs don’t produce the correct Key Information Document (KID) that are required for ETFs to be sold in Europe anymore.

This became a requirement in 2018 with the introduction of PRIIPs (Packaged Retail Investment and Insurance Products) regulation, where prior to this the KID was not needed.’’


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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