The practical philosophy of Stoicism can help when you are dealing with FOMO. Especially if it’s dialed up because of whats been going on in the crypto and NFT markets. If you have only been in the NFT or crypto space for the last 6 months, FOMO is likely playing havoc with your judgement at the moment. Working with Seneca’s Stoicism can help you deal successfully with FOMO.
The first step in any philosophical exercise is to ponder what we mean by FOMO. Especially as it relates to cryptocurrency and NFT markets at this point in the cycle. Crypto has had a strong bull run in 2021. Although it did have a dip mid-year. For the Stoics, FOMO would be an emotional disturbance that interferes with or distorts our capacity for rational judgement. Or they might have called it a proclivity that has been triggered by external events.
Seneca and other Stoics prized freedom. That freedom was contrasted with slavery. Most, if not all of the upper class Romans owned slaves. Epictetus was himself once a slave. Being enslaved by emotions that distorted your judgement was the chief thing Stoic philosophy aimed to avoid.
Stories about the fortunes that have been made in crypto and NFT’s throughout 2021 has attracted many newbies into these markets. FOMO in crypto markets often results in buying or selling at the worst possible time. Newbie’s often buy when a coin or NFT is within reach of, or has just reached an all time high. Then the sell when it drops precipitously after an all time high, or after holding all the way to the bottom. This behavior of novices occurs in all markets, especially in the stock market.
What is FOMO
If we consider the various emotions that make up FOMO we can better understand why it needs to be managed so we make better trading and investment decisions. The first emotion to consider is desire. Many of us are lured into the NFT and crypto markets by all the stories emerging from a well developed bull market. For me it was Beeple’s NFT art piece selling for $69 million dollars. What that did — after asking can that be right? — was prick a desire for wealth, preferably life changing wealth obtained in an ethically excellent manner. Cryptocurrency has clearly been a forum for many people to achieve that goal.
A second emotion of FOMO is likely to be envy. Because there have in fact been many thousands of people who have achieved stratospheric gains from crypto. Hundred’s if not thousands of people bought Solana for a dollar or less, and sold much of their holdings above two hundred dollars. That more people continue to do things like that while I sit around not even participating in that market turned the wick of envy to some degree.
Then these two emotions, desire and envy, can lead to some distress caused by rivalry. Others who have done so much better than me financially might be exponentially improving their wealth through crypto and NFT’s while I make no progress. Whether this turns into actual anguish I’m not so sure. But clearly FOMO triggered by stories of such large fortunes being made does disturb the judgement most of us use when making investment decisions.
Starting out in crypto & NFTs
To that end I think my strategy for investing my first $100 in crypto differed substantially from more experienced traders. This strategy was predicated on the belief that if only investing $100 this week I’ll have another $100 in a week, a month or next quarter. So rather than buy a little Bitcoin or ETH, I let my FOMO help choose: buying three things I thought will make me richer soonish. Meme coins and some other micro-caps picked by Youtubers and the Twitterati. Because like a lot of people I can learn a shedload from my mistakes.
Of course it’s still necessary to follow through on Gary Vee’s advice about getting into NFT’s. Do at least 50 hours of research into the thing you are investing in – NFT’s or the cryptomarket – before spending your money. In all likelihood your first couple of choices are not going to make you rich. Many people will lose money as they begin their crypto journey, even more people who dive into NFTs. Stoics were always rehearsing poverty or imagining being dead to lose their fear of death or being reduced to poverty. If you’re only putting in a hundred dollars to start with, treat it like something you could have spent on coffee and cake or wine and beer. Something you were never going to see again anyway.
It seems to me that lessons learnt from research takes on a whole new and improved intensity by getting some skin in the game. This will help to make great strides in the quality of research outcomes. By buying a few sh*tcoins and then really learning about them and the functions they purport to have, in all likelihood, when you see a really good business case, it will stand out as quality. Just as when learning what is so great about the literary classics like War & Peace or Nausea it can be useful to read James Patterson.
The crypto bull market
Many commentators compare the euphoria of the current market with the internet 1.0 boom of the late 1990’s. If FOMO is something you are dealing with right now, it is more accurate to compare the current craze in NFT’s and crypto to the gold rushes of the 19th century. Back then people aped into digging for gold. Many shifting their whole life to another country because of newspaper reports that new goldfields had been found. In particular, stories from the gold rushes in California and Australian goldfields like Victoria & Kalgoorlie document how tens of thousands of people, in an attempt to get rich in a hurry digging for gold, threw their whole life aside, not just their life savings. Many succeeded. Far more failed, miserably.
To make as much money as the FOMO generating stories of the 2021 crypto market, it is usually necessary to be buying at the floor price of new projects. And to buy at the floor how much experience do you need? How much knowledge of the market and the niche of the new project do you need? And how many of your new projects will succeed? Because investing in new projects in the crypto market is akin to being a VC, and they operate on the basis that some of their stakes will go to zero while one in 20 or 30 will go 1000x or more.
Stoic tools for FOMO
Stoicism is about managing your emotions, which is generally essential for successful participation in the crypto or any other marketplace. Not least because you have to accept that things are outside of your control. If you invest more than you can lose, you are likely to struggle to control your perception of events when bitcoin falls out of bed, which it does. Regularly. Even during bull markets.
Your character will be tested by the volatility of the crypto markets. It will also be tested when there is a significant downturn in the NFT landscape. The Stoics teach that you can grasp your character by scrutinizing your habits. By understanding your habits and how they are connected to your values and external goods, you can gain an understanding of how those habits will play out in your engagement with the crypto market.
Perhaps one Stoic idea to start with is that FOMO has a prerequisite. Without market euphoria e.g. the gold rush, no-one would be feeling fomo about crypto. Just as next year or the year after in the middle of crypto winter, many newbie’s to todays crypto and NFT marketplaces will not think about it for months at a time.
The problem with crypto fomo is that it freebases that euphoria straight into your investment ‘strategy’. It can deform your rational capability to make good choices. It probably doesn’t cause you distress but it is likely to nurture a feeling of anxiety that deforms your judgement. In particular it can deform your analysis of the risk you are taking. It could turn you into a gambler focused on the potential wins and paying not nearly enough heed to the potential for losses. And in most gambling contexts the risk is you lose your entire stake.
Just as reading, pondering and writing about Seneca’s Letters is a useful exercise for managing anxiety, so to it can help moderate the euphoria of the crypto markets and a proclivity for FOMO.