A very significant challenge for any financial market is to find a reliable source of information and avoid information traps. Many websites and personalities claim to offer the key to the kingdom of correct information, or a glimpse into their proverbial crystal ball. In the end, nobody has complete knowledge of the cryptocurrency market. Currently the cryptocurrency market is in a bear (downward) market, people are grasping for news and information to explain away or attribute the cause of the bearish conditions in early 2018.
Websites, YouTubers, and other social media sites offering cryptocurrency market news and information are not reliable sources of information. The key to successfully understanding the cryptocurrency market is to know how to guard against falling into the news and information traps that circulate throughout the internet and social media platforms. The first step for investing is to identify those news and information traps. Here are examples of news and information traps that are often found in cryptocurrency market news.
Examples of News and Information Traps
- Hype over a single event. These news events can provoke individuals to buy or sell due to over-optimism, fear of a price drop, or fear of missing out (FOMO). Therefore, reasonable and patient trading plans are abandoned for more compulsive and short-term purchases or sales of cryptocurrencies. Watch out for the following types of news events:
- News of coin burns, (explained incorrectly)
- News containing speculative statements on coin prices, especially statements made famous people
- News and speculation on hard or soft forks
- Non-official news (otherwise known as rumors) about coins being added to a popular exchange service.
- People writing or reposting social media or articles. This type of news is rife with third-party opinions and rumors. A tell-tale sign of this type of news is if there is a lack of a concise argument upfront or specifics regarding the source of information. If these two are elements are lacking, it is highly likely that this type of new is internet noise and therefore should be discarded.
- News commentary and analysis based on false assumptions or inaccurate information. If possible, fact-check information and look for well researched sources of information. If you do not have time, look to paid research services. CoinReconGroup can help in this type of service.
- News using sources with questionable motives due to their financial interest. Consider who is providing the information and their motives for advocating whether to buy or sell a cryptocurrency.
Beware of FUD
The reason inaccurate or false information proliferates the internet and social media is largely due to fear, uncertainty, and doubt (otherwise known by the acronym as FUD). FUD is a consequence or byproduct of the prevalent social forces that circulated and fill the gaps in information about the current state of the cryptocurrency market. Beware of FUD and the people (and organization) who try to sell it. Below are Indicators to assist in identifying people or news outlets who proliferate FUD.
- People or news outlets who shows signs of being easily panicked and demonstrate a need to repeat the rumors of the day.
- People or news outlets whose news and information lacks a logical argument or lacks demonstrated due diligence in their research.
- People or news outlets who purposely spreads hype or disinformation due to their financial incentives or have incentives to discredit their competitors.
What Information to Believe
CoinReconGroup makes the following recommendations when assessing the cryptocurrency market news and information.
- Ensure your source of information is based upon facts and logical arguments. Keep track of news sources that demonstrate objectivity and logic. Disregard and bypass low-information posts and articles.
- Consider subscribing to CoinReconGroup, a paid market news and information research service, who has a vested interest to provide timely and relevant information. Time is a scarce resource. It can also lead to enabling more informed decisions and preservation of wealth.
- Consider using charting software or service (paid or free). Charting software offers technical analysis tools and indicators, which offers objective and quantifiable data about a cryptocurrency. CoinRecon Group recommends tradingview.com.
- Typically, good cryptocurrency article, videos, and blogs have reasonable claims, not exaggerated claims of certain coins raising drastically in price.