FUD refers to ‘Fear, Uncertainty, and Doubt’. In the context of the cryptocurrency market, this refers to the practice of spreading rumors and negative publicity about certain blockchain projects, normally without merit.
These practices are normally carried out against competing blockchain projects, some players in the industry will try to undermine their opponents so that they can capitalize and receive a bigger market share.
It can also be caused by uninformed, or rash investors. For example, consider when a cryptocurrency that is generally making strong gains, takes a small drip in price. Some investors could become disheartened and be lead to believe that either, the coin is crashing, so they spread the word about it. Another example is that due to some of the negative publicity surrounding the cryptocurrency market, drops in price are commonly attributed to the shorting of the cryptocurrencies value by outside influencers, although more often than not, no ‘shorting’ has actually taken place.
The spread of FUD can severely damage the value of a cryptocurrency, leading to people cashing out, which further reduces faith in the product. This can sometimes lead to continued losses that may be hard to recover from.