The United States Securities and Exchange Commission has reissued its warning about fear of missing out (FOMO) driven investing, urging investors to exercise caution when investing.
The warning comes just days before the commission is set to announce its decision on pending spot Bitcoin ETFs.
Don’t Invest Because Of FOMO
The warning about fear of missing out (FOMO) investing was issued by the United States Securities and Exchange Commission’s Office of Investor Education and Advocacy. The advisory was the fifth in a and warned investors about the risks associated with digital assets such as meme coins, meme stocks, non-fungible tokens (NFTs), and cryptocurrencies.
“Digital assets include cryptocurrencies, coins, and tokens like those offered in initial coin offerings (ICOs). Meme stocks may be based on internet popularity and social views instead of a traditional stock value, such as a company’s performance. And, let’s not forget about NFTs (non-fungible tokens).”
One of the first appearances of the “Say no go to FOMO” series came on the 23rd of January, 2021, in the middle of a staggering bull run that saw Bitcoin (BTC), Ether (ETH), and several other altcoins hit new all-time highs. The warning was reissued in March 2022 when the markets were on a downward trajectory.
“Just because others might buy a particular investment doesn’t mean it’s the right opportunity for you. We’ve all seen the increased interest in online investing and the explosion of digital assets and meme stocks. Understanding these kinds of investments may seem overwhelming.”
In the latest post, SEC director Lori Schock advised investors to refrain from succumbing to increasing interest in digital assets. Schock also advised investors not to base their investment decisions on factors such as celebrity recommendations and recommendations by social media influencers or entertainers. The director also emphasized the risks posed by market swings, volatility, and more.
“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.”
The Problem Of Celebrity Endorsements
The problem of scam projects being promoted by celebrities is not a new one, and several prominent personalities have promoted some dodgy projects, leading to enormous losses for those who had invested in them. For example, Kim Kardashian reached a settlement with the Securities and Exchange Commission on the 3rd of October last year. Kardashian agreed to pay a fine of $1.26 million after she was charged with failing to disclose she was paid $250,000 to promote a scam token called Ethereum Max (EMAX) to her followers. The SEC has also reprimanded several other personalities for promoting similar projects.
Markets Wait For Spot Bitcoin ETF Approval
The Securities and Exchange Commission statement comes just days before it decides on applications for a spot Bitcoin ETF. Many expect an announcement to be made by Wednesday, the 10th of January, potentially clearing the path for a spot Bitcoin ETF starting as soon as the 11th of January. Several major financial institutions are in the fray and are hopeful of getting approval for their respective funds.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
