A few days ago we made a first part about terms that every trader in the cryptocurrency ecosystem should know. These terms were born within the jargon of the stock market world, but there are others that have emerged from scratch in the cryptocurrency ecosystem. So let's now go to the second part with more words that we should know.
FOMO
FOMO is the term commonly used for investors who jump into buying an asset for fear of missing out on a profit opportunity. This term usually derives from investors who get carried away by their emotions, which can usually generate strong upward movements. At the same time, when there is a lot of FOMO in the investment world, it is often interpreted that we are about to reach the end of a bull market.
FOMO cycles. Source: Meridian Financial Partners.
BUIDL
The term BUIDL derives from the word HODL (which we discussed in the previous installment). This concept describes the users of the cryptocurrency ecosystem who continue to develop without caring about the fluctuation of asset prices. These users are usually the ones who truly believe in the potential of this technology and the ecosystem, given that even though we are facing a bear market, they will continue developing their projects to continue improving the cryptocurrency ecosystem.
Number of developers present on the Cosmos network since last year. Source: Tokenterminal.
ROI
The acronym ROI (Return On Investment) means return on investment. ROI is measured by comparing the return that an investment has generated from the initial investment. It is an ideal way to calculate the returns on investments. For example, if we made an investment of $300 in ETH during the crash on March 13 and currently our investment has appreciated to $400, our investment offers us an ROI of 33%. The ROI formula would be the following:
Formula for calculating the ROI of an investment.
ATL
The acronym ATL (All-Time Low) is the opposite of ATH, it is the lowest price of an asset. Breaking an All-Time Low on an asset can generate a similar effect as breaking the All-Time High, but in the opposite direction. For example, many stop orders can be triggered when an ATL is broken, which can lead to a strong move lower.
Since there is no history of prices below the previous All-Time Low, the market value may continue to decline, going lower and lower. Since there are not necessarily logical points for you to stop, buying during these times is very risky, known as "catching a knife in the air."
After breaking the previous ATL, this asset sank harder. Source: Tradingview.
DD
The acronym DD (Due Diligence) is a term that means due diligence. It refers to the investigation and care that a rational person or business is expected to perform before reaching an agreement with another party. When investors are looking for potential investments, they should do their own due diligence on the project to ensure they can take all risks into account. Otherwise, they will not be in control of their investment decisions and may end up making wrong decisions.
KYC
The acronym KYC (Know Your Customer) means know your customer. These acronyms refer to the practices that guarantee that institutions that facilitate the trading of financial assets verify the identity of their clients. The main reason behind this is to minimize the risk of money laundering.
Different levels of KYC on Binance. Source: Atani Blog.