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Fear, uncertainty and doubt (FUD) is a common tactic used to manipulate investor and consumer emotions. It can come in the form of rumors, adverse facts, false news stories or any other piece of information that a person or group can use to their advantage. For instance, short-sellers may use FUD to drive down the price of a stock.

The phrase has been around for decades and the acronym has been popular since at least the 1970s. In recent years, it’s most often been heard in the cryptocurrency community.

So, what is FUD? Here’s what FUD means in the context of investing in stocks and crypto and how to protect yourself from it.

FUD in crypto

In the crypto market, FUD is particularly prevalent due to the newness of the digital asset and the potential for misunderstanding the underlying technology. Fear of security breaches, increasing regulations and rumors play a part too. These factors can lead to huge market swings as investors abandon their positions in response to negative headlines. For instance, in recent years the implosion of several exchanges and the high prevalence of fraud, such as rug pull schemes, have induced plenty of FUD.

FUD in stocks

While FUD is common in the crypto market, the term was first used decades ago to represent the potential for investors to succumb to anxiety or pessimism that affects their decision-making. FUD is sometimes used to describe investor activity in the stock market, but it’s now more common in the acronym-heavy crypto community.

Like in crypto, FUD in stocks can be spread through social media or mass media, and it can influence trading decisions. “Investors hate uncertainty, and along with fear or doubt, can prompt a wave of ‘sell first, and ask questions later.’ Especially turbulent times in financial markets can be chalked up to this, but at the same time it often proves to be an attractive buying opportunity for disciplined, long-term investors,” says Greg McBride, chief financial analyst for Bankrate.

FUD vs. FOMO

FUD may be spread in real life or on social media, but the fear of missing out (FOMO) is a different type of FUD. FOMO refers to the fear of not benefiting from something others are enjoying. For example, if a stock is soaring and investors are seeing big returns, a FOMO investor may fear that they are missing out and invest in the stock even though it may be overvalued. In the higher-volatility crypto market, FOMO is even more dangerous, as investors may feel like they are missing out on opportunities for quick gains.