NFT FOMO: What Are The Factors You Should Consider?

NFT sales had surged to $12 billion, as of 7th December 2021. However, NFTs are often correlated with FOMO-investing. NFT FOMO is real and it exists.

FOMO simply is an abbreviation for ‘Fear of missing out.

To give you context, FOMO originally refers to a feeling of worry or a sense of anxiety that someone might face after witnessing something fun and exciting and not being a part of it.

So, how does a term used by millennials and Gen Z get so regularly attached with something like NFTs?

As the NFT industry grows, the newer and better and the artworks churn out bigger sales records with every sale, the people who haven’t explored the industry, decide to peek into it. This is what leads to a sense of missing out on gains after they see an unprecedented spike.

Let’s look at how does FOMO works in NFT, what are the things you need to keep in mind and other factors that are important to consider.

What is NFT FOMO?

For instance, say an NFT just got sold for $50 million.

While someone who has been in the NFT or the crypto space might comprehend that it’s just a peak for one of many NFTs that are sold every day.

However, for someone who just read a headline about the same on their mobile, this might seem like an opportunity. As the mainstream adoption of NFTs (and cryptocurrencies) is still at a very nascent stage, it might seem like an opportunity that might be missed, if not grabbed at the earliest.

This might induce a person who’s not deeply aware of cryptocurrencies and NFTs to invest in them, without giving it a second thought.

The entire phenomenon can be called FOMO or FOMO investing in NFTs. Although, many times a FOMO might even be created with the help of speculations or manipulations. 

Types of NFT FOMOs

Buyer FOMO

Buyer FOMO is when you see a new, much-hyped NFT project that is going to be live in a few days. This is experienced mostly by paper hand NFT investors who seem to be a little underconfident with their picks.

Seller FOMO

Seller FOMO happens when you decide to sell your NFTs on speculations or some minor falls. A seller FOMO might also kick in when you see an opportunity to sell and make profits, instead of holding onto your pick for a little longer.

Holder FOMO

Holder FOMO, simply like a seller or a buyer FOMO is something that you might HODL an NFT, but are skeptical about the decision you make.

Holding onto an NFT is a decision that you might make after thorough deliberation and a lot of thought. Hence, questioning your decision based on a few speculations isn’t the most suitable move.

Things To Consider Before You NFT FOMO Invest

• Don’t believe everything on the internet

One of the most influential aspects of the NFT space is the influencers. While it might not be the case, that an influencer might always push content that benefits them, it is quite probable. The lines between a paid collaboration and an honest recommendation may have blurred a little these days.

Be aware and consume the content that creators and influencers put out there, but always ensure that you conduct your due diligence from your end. Check for the distribution rate (preferably more than 50% is considered safe), and the other fundamentals of the NFT you feel like investing in.

• Refer to Floor Price and LTP

When investing in NFTs, there’s a very important thing you need to look at- Floor Price.

The floor price is the price of any NFT at its lowest. Basically, that’s the minimum amount of price one needs to pay for investing in an NFT project. The floor price is set by the person who owns an NFT. So, for instance, the price floor of an NFT is 10.50 ETH, anyone who wants to buy that cryptocurrency, needs to spend at least 10.50 ETH on that NFT.

However, the price floor might not be the most adequate measure of an NFT’s health. Apart from the floor, one should also look at the last transacted price or the LTP as well. In case, you are looking at an NFT which has many holders, a better price to take into consideration would be the LTP.

• Know the NFT owners

Knowing the background and the intention of the NFT owners pre-launch can help in making a better decision for you.

Consider asking questions about the goals of the owners, whether they want to hold or flip etc. In case, the owners of the project are more into flipping, the prices of the NFTs might be a little unstable and highly volatile. Apart from their end goal, do a little research around their level of professionalism and seriousness towards the project as well.

This will very well determine the project’s future. NFT owners can have a major influence on their NFT project and its prices.

• Understand the metrics

Instead of going for the FOMO feelings, always go for the numbers. Whenever any NFT you feel like giving a second look, always go through the metrics like the trade volume for that NFT, activity trend, the project’s community, and more.

Going through the presence of the project on social media and understanding at what stage that NFT project is at, can turn out to be quite beneficial.

Conclusion

NFTs are still growing and they have had a pretty decent 2021.

When it comes to investing in NFTs, it’s pretty much acceptable to join the FOMO trend just out of curiosity. Although, it is recommended only till the point that you can sustain the risks involved.

Whether it’s NFTs or cryptocurrencies, both of them are quite volatile. And, hence before you dip your feet into the NFT waters, it is always recommended to go through the metrics. Make sure you are adept with all the terminologies and slowly and gradually move into the NFT landscape.

Reaching out to communities on Discord and other platforms might also be a good idea, to analyze and understand what the crypto world holds for you.