By
Bena Ilyas
May 17th, 2024
The financial regulator began issuing warnings against FOMO in January 2021 amidst a soaring crypto and equities bull market.
The United States Securities and Exchange Commission (SEC) has issued a cautionary warning to investors regarding FOMO (fear of missing out) amidst increased hype for a Bitcoin (BTC) spot exchange-traded fund (ETF).
In a post titled “Say no go to FOMO” on the social media platform X, the SEC’s Office of Investor Education warned retail investors against buying into a “particular investment” simply because others are doing the same due to the rising excitement surrounding the assets.
#SECInvestingResolution 5: Say “NO GO to FOMO” (fear of missing out). Just because others might buy a particular investment, doesn’t mean it’s the right opportunity for you. Learn more about finding out what’s right for you and your investing goals: https://t.co/fixDWoNFrF pic.twitter.com/SGf1z6xmhL
— SEC Investor Ed (@SEC_Investor_Ed) January 6, 2024
FOMO Is Not the Best for a Strong Financial Future
The warning comes as the crypto community anticipates the approval of the ETF this week on January 10, as market analysts, including Eric Balchunas and James Seyffart, predicted.
Last week, companies seeking to roll out BTC spot ETFs in the US market submitted the final version of a key document in the SEC’s approval process, heightening excitement for the potential approval of the investment product.
Despite the anticipation, the SEC’s Office of Investor Education has cautioned people to be careful and conduct due diligence before jumping on the BTC bandwagon.
In a separate blog post, the financial regulator advised that “buying and selling investments along with trends and influencers because of a fear of missing out is not the best way to plan for a strong financial future.”
Furthermore, the securities watchdog cautioned investors to be wary of “trendy investments,” including digital assets, as market swings are inevitable due to their volatile nature. Instead, the SEC has advised investors to diversify their portfolios to stand a better chance of safeguarding their funds in case of a market downturn.
SEC Issues FOMO Warnings to Investors
The financial regulator began issuing warnings against FOMO in January 2021 amidst a soaring crypto and equities bull market. By November that year, Bitcoin and other cryptocurrencies had recorded all-time highs, attracting many people to the industry.
In 2022, the SEC’s education unit issued a second warning in March when the entire global financial market experienced significant downturns. BTC saw a new low of $15,787 after reaching nearly $70,000 the previous year.
The third warning came on January 6, 2024, following the anticipated launch of the BTC ETF in the market. The latest warning cited celebrities and athletes promoting cryptocurrencies, urging investors not to trust anyone on the internet and to make financial decisions based solely on their favorite celebrities touting an investment opportunity.
“You may see your favorite athlete, entertainer, or social media influencer promoting these kinds of investment opportunities. Although it’s tempting, never decide to invest based solely on their recommendation.”
On many occasions, the SEC has taken legal action against celebrities, including Kim Kardashian and Floyd Mayweather, for promoting digital assets without proper disclosure.
SEC Could Approve Spot Bitcoin ETFs
Meanwhile, the crypto community welcomed the latest warning with warm feelings, as some claimed the report could suggest the SEC would soon authorize one or more spot Bitcoin ETFs, currently awaiting the agency’s decision on January 10.
“A very interesting timing of this tweet. Could a possible approval of a #Bitcoin Spot ETF prompt the SEC to provide warnings about FOMO on the Saturday before said approval? Hmmm…” a user wrote on X.