SEC Renewed Crypto ‘FOMO’ warning Amid Optimism for Bitcoin ETF Approval

The United States Securities and Exchange Commission (SEC) reissues a warning that highlights the risks attached to FOMO (Fear of Missing Out) crypto investing due to growing anticipation around the potential approval of spot Bitcoin exchange-traded funds (ETFs).

In a January 6 post on X (formerly Twitter), the SEC’s Office of Investor Education again cautioned retail investors about the risks presented by digital assets, meme stocks, cryptocurrencies, and nonfungible tokens (NFTs).

One of the first sightings of the “Say no, go to FOMO” blog post appeared on January 23, 2021, right in the thick of a roaring crypto and equities bull market where Bitcoin, Ether, and many other altcoins reached new all-time highs by November 2021. It was reiterated around March 2022 when markets were cooling.

#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

Speculators on social media have already started suggesting that the imminent decision to approve Bitcoin ETFs might be the reason behind the revived warning. The decision is anticipated before January 10. The approval of these ETFs would considerably boost the interest in cryptocurrency.

The SEC advisory particularly elaborated on celebrity and athlete influencers promoting various crypto assets. It recommended that investors not make financial decisions solely based on the recommendations of these prestigious figures. The warning says,

“You may even see your favorite athlete, entertainer, or social media influencer promoting the same investments. But be aware, just because someone famous says a product or service is a good investment doesn’t mean it is.”

The warning becomes more significant because some influential figures have been fined for promoting some cryptocurrencies, hiding possible payment.

Celebrity SEC Settlement & Crypto Caution

As an illustrative example, on October 3, 2023, celebrity Kim Kardashian settled with the SEC. She agreed to pay $1.26 million as a resolution. The charges against her originated from her failure to disclose a $250,000 payment received for promoting a dubious token called Ethereum Max (EMAX). She had promoted EMAX to her substantial Instagram following.

The report also emphasized the potential volatility of assets influenced by “trends and influencers.” It cautioned investors about the allure of initial gains that the market may swiftly erase as it evolves.

“How would you feel if your investment lost 20, 30, or even 50 percent in a single day?” the report asked its readers, pointing out the unpredictability of the crypto market.

The crypto industry is waiting for any news with bated breath over the developments on the Bitcoin ETF front. Most applicants above regulators’ thresholds by the December 29 print will see their applications approved this week, estimated Eric Balchunas, senior ETF analyst at Bloomberg.

This expectation reflects the ongoing scrutiny and interest surrounding the approval of Bitcoin exchange-traded funds. The decision on these ETFs will undoubtedly shape the trajectory of cryptocurrency markets shortly.

Related Reading | Chainlink Alert and Bitcoin’s 2024 Rally Forecast