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What is FUD in Crypto?

Eric Huffman
Last updated: | 9 min read

Crypto comes with its own language of strange-sounding acronyms and abbreviations. One of the most common acronyms is FUD, which stands for Fear, Uncertainty, and Doubt. The term pulls double duty as both a noun and a verb. If you’ve ever wondered, “What is fud in crypto?” we’ll explain FUD’s meaning and definition as well as how FUD can affect crypto markets both large and small.

The FUD acronym refers to spreading negative information, which isn’t always true but can affect digital asset prices. Let’s explore FUD in crypto to learn how it can affect your investments.

How Does FUD Spread?


In crypto circles, FUD most often spreads via social media and messaging apps. For example, many cryptocurrency altcoins use a Telegram group for traders to communicate and discuss what’s next for the token. These groups, while helpful, can also be a platform for FUD.

Below, an altcoin was starting to go parabolic. A couple of people in the Telegram group began to spread fear, uncertainty, and doubt by questioning the honesty of the developer team.

crypto meme coin fud

One big holder sold, which started the cascade of selling. This fledgling altcoin had run from a $3,000 market cap to a $120,000 market cap in a matter of minutes. The selloff happened even faster, and FUD was at the heart of the crash.

Why did the FUD start? Perhaps the people involved were looking for a better entry price point. If so, they got it, but at the expense of everyone else. FUD can obliterate a token with a small market cap. However, fear, uncertainty, and doubt can also affect projects with a larger market cap in the cryptocurrency space.

How Can FUD Impact The Cryptocurrency Market?


Negative energy and misinformation can add turbulence to an already tumultuous crypto market. In some cases, the effects of FUD are short-lived and only affect a few traders. In other cases, FUD can lead to panic selling, taking trading prices well below where the market would price the crypto assets otherwise.

Volatility

Markets move up in steps. Dips due to profit-taking are normal. However, fear, uncertainty, and doubt can cause the market to shift direction or amplify the moves down that begin with normal trading. On small-cap cryptos or the most volatile cryptos, a few words in a group or a bearish post from an influencer on Twitter can cause a dip.

Even large-cap cryptos and those regarded as the best cryptocurrencies are prone to market volatility from FUD. Following the launch of several Bitcoin exchange-traded funds (ETFs), industry chatter turned to the possibility of Ethereum ETFs. However, hopes for an ETH ETF quickly turned to FUD as rumblings about an SEC investigation into the Ethereum Foundation quelled the ETH market. ETH often trades in close relationship to Bitcoin.

Below, you can see where fear, uncertainty, and doubt began to cause a greater divergence between the two leading cryptocurrencies.

eth etf fud

ETH’s price later spiked on now-confirmed rumors that the SEC would approve ETH ETFs.

Panic Selling

Uncertainty and doubt cause market movements like the ETH/BTC divergence shown above. However, fear elicits a much stronger reaction. Fear can create panic selling among crypto investors.

In early November 2022, news broke that the FTX crypto exchange had collapsed. An already embattled Bitcoin market dropped further in a sharp downward move. However, among the leading cryptocurrencies, Solana (SOL) dropped most dramatically on the news.

ftx collapse fud

FTX was seen as the biggest supporter of SOL’s price, which affected investor confidence hugely, causing traders to panic sell. The market sold off its SOL holdings relentlessly until 2023.

Profit Opportunities for Bad Actors

Larger markets can also suffer from FUD, but bad actors can move smaller markets more easily. In some cases, people who spread fear, uncertainty, and doubt may want a better price for entry. In other cases, they may be invested in a short trade. Today’s crypto trading market supports leverage trading for relatively small cryptocurrencies, meaning someone with a large enough following can move markets enough to turn a significant profit with some well-delivered FUD.

Reputational Concerns

In some cases, FUD can even harm a project’s reputation. For example, online FUD can damage a crypto ICO (Initial Coin Offering) launch prospects. To a greater extent, FUD can impact the entire crypto industry. Investment guru Warren Buffett is known for “fudding” the industry as a whole, predicting a bad ending for Bitcoin and other cryptocurrencies.

On a more focused level, FUD can impact a promising project, preventing it from reaching funding goals. On a larger scale, fear, uncertainty, and doubt spread by financial pundits can slow or even derail the public’s adoption of digital assets.

Why Is it Important to Be Aware of FUD?


Whether it’s someone with ill intentions or just a bear given a loudspeaker, others can affect how the crypto community sees a specific cryptocurrency. The resulting fear, uncertainty, and doubt can cause trading decisions based on emotions rather than reason. As traders, it’s important to sift through the FUD to get to the truth.

While FUD can instantly shake market participants out of a position they’ve carefully built over time, FUD can also create opportunities. If the market or a specific token is selling off and you can’t identify a legitimate reason, you might get a lower price simply because you see the long-term opportunity through the fog of fear and doubt that the market can’t navigate. When others are selling due to FUD, you can even benefit from positive slippage in trades, getting more tokens than expected with your trade.

Informed Decision-Making

Information becomes an invaluable resource in investing, especially in the crypto space. However, we should always question the source to make a better-informed decision. Does some pseudonymous person with a Batman profile picture really have inside information that could be bad for the price of the crypto you’re trading? Or could it be FUD?

Always question the source and look for a way to confirm or disprove things being said about a specific cryptocurrency.

Preventing Manipulation

Misinformation and innuendo can be used to manipulate markets. Given the volatility of crypto markets compared to traditional investments, crypto traders are particularly vulnerable to FUD meant to manipulate the price. Study your investment before you make a move, and reevaluate before trading. Often, traders fall victim to misinformation and sell based on fear. It may cost you more to buy back in later if the FUD was nothing more than short-term price manipulation.

Critical Thinking

A well-worded dig at a crypto ticker can cause doubt. Revisit your original reason to invest. Has anything changed for the worse? Can the information from a pseudonymous person on Twitter, Discord, or Telegram be verified elsewhere? Be suspicious of any information, whether good or bad, provided on social media. Think critically and do your own research (DYOR).

Safeguarding Investments

Commentary or negative news that creates fear, uncertainty, and doubt shouldn’t always be disregarded. In some cases, the “fudder” makes a good point. Markets and circumstances change. While you can’t let FUD guide your crypto investing decisions, some apparent FUD may be worth investigating to protect your downside.

While the crypto market’s volatility and relatively low market caps make it more susceptible to fear and doubt-based trading, blockchain’s transparency allows people to learn more about tokens. Thus, the FUD may have a solid basis.

How Can I Check if FUD is Real?


FUD may be a ploy to manipulate the price. It can also arise from jealousy or tribalism. However, information that seems like FUD is worth verifying sometimes. If the FUD is based on real information, it’s wise to look for ways to verify the information with additional sources.

Evaluate the Source

Even social media accounts with a huge following can create misleading information. Evaluate the source, but don’t let your opinion be swayed by the follower count. Look for reputable sources within the crypto industry to verify the information or use a blockchain explorer to research transactions. The project page itself can be an excellent resource. If the level of doubt is significant, projects often post something to quell fears on their X page or website. Look for ways to verify that as well.

Examine Evidence and Data

The blockchain provides transparency. In many cases, you can verify information yourself by checking transaction data, volume data, and token contracts. Tools like Etherscan, Base Explorer, and Solana Explorer can help you find transactions and wallet data. Tools like Token Sniffer can help you learn more about ERC-20 tokens, including holdings and liquidity.

Ask well-worded questions if you need more information to aid your independent investigation. Be careful not to spread FUD yourself, however. Some groups ban “fudders,” and you may lose access to the community for your investment.

Fact-Checking

Additional crypto tools like Messari, Token Terminal, and DeFiLlama can provide additional insight into tokens, coins, and chains. Perspective also matters, however, and using tools can help you see the big picture. For example, it’s true to say that the total value locked (TVL) on Solana has crashed since its peak. However, that ignores the spectacular recent growth from the lows of the bear market. FUD can take the form of half-truths.

sol tvl

Identify Motivation and Intent

Statements that create fear, uncertainty, and doubt are often an attempt to manipulate the price. However, the motivations can vary. FUD can come from jilted investors, people looking for a lower price, or scam artists. The latter is common in altcoins and, more specifically, meme coins.

One common crypto rug pull centers on dumping tokens at the top, spreading FUD with additional accounts to drive the price to the ground, and then offering to “relaunch” the project. To buy into the “new” token, the scam requires you to send your worthless old tokens and a seed investment of ETH or SOL. Don’t send more crypto; it’s a scam. However, it may be best to take the loss on the failed token by selling into the liquidity pool.

Final Thoughts on FUD


Fear, uncertainty, and doubt are the enemy of well-reasoned trading decisions in crypto. The volatility of crypto markets and the social media-driven discussion of crypto prices and the prospects for tokens make crypto traders particularly vulnerable to FUD. However, you often have several ways to verify information before making a trading decision. Treat any statements about positions you hold or are considering with the appropriate amount of suspicion, whether bullish or bearish. As always, do your own research.

Fear, Uncertainty and Doubt (FUD) FAQs

What does FUD mean in crypto?

FUD stands for Fear, Uncertainty, and Doubt. The term refers to online statements that create doubt about a particular cryptocurrency.

How does FUD work?

By making (perhaps untrue) statements about a given cryptocurrency, people can cause others to sell their position or refrain from buying. Often, FUD is used to manipulate the price of cryptocurrencies and tokens.

Is FUD an insult?

FUD refers to creating fear, uncertainty, and doubt. FUD can be an insult if someone accuses someone else of “fudding,” although the accusation often has a basis.

What is an example of FUD?

One example of FUD could be saying that the developer or project is selling tokens from a secret wallet. This might lead others to sell or deter other people who were considering a position.

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