SEC Issues FOMO Warning Amidst Bitcoin ETF Approval Anticipation

Just days before the expected approval of spot Bitcoin exchange-traded funds (ETFs), the United States Securities and Exchange Commission (SEC) reissued a warning regarding FOMO investing in cryptocurrencies.

The SEC’s Office of Investor Education reiterated its admonishment to retail investors regarding the hazards linked to digital assets, such as meme stocks, cryptocurrencies, and nonfungible tokens (NFTs), in a January 6 post on X (formerly Twitter).

A “Say no to FOMO” blog post made one of its earliest appearances on January 23, 2021, during a raging bull market for cryptocurrencies and stocks, which witnessed Bitcoin, Ether, and numerous other altcoins reach new all-time highs by November 2021.

A revised warning was issued in March 2022, coinciding with a decline in market sentiment. Several social media users hypothesized that the report might indicate the SEC will sanction one or more spot Bitcoin ETFs, which are presently pending a decision before the January 10 deadline.

The cautionary note referred to the endorsement of crypto assets by celebrities and athletes, cautioning investors against basing financial decisions solely on endorsing investing opportunities by well-known figures.

The regulator has levied fines and penalties against celebrities over the years for their participation in promoting particular cryptocurrencies.

Kim Kardashian reached a settlement with the SEC on October 3, 2023, which entailed a payment of $1.26 million.

The allegation against her was a failure to disclose that she had been compensated $250,000 to endorse a fraudulent token known as Ethereum Max (EMAX) to her 360 million Instagram followers.

Moreover, the report cautioned investors regarding the possible instability linked to assets that experience significant fluctuations owing to “trends and influencers.” It stated that although such fluctuations may initially appear alluring, they frequently accumulate losses rapidly as the market progresses without them.

The report asked its audience, “How would you feel if your investment lost 20, 30, or even 50 percent in a single day?”

Presently, the cryptocurrency sector is observing the Bitcoin ETF market with great concern. Eric Balchunas, a senior Bloomberg ETF analyst, forecasts that most petitioners will be granted approval within the week, or at the very least, those who fulfilled the regulatory requirements before December 29 will be granted approval within the week.