The reason why is FOMO is bad sometimes because it leads to buy high sell low situation instead of buying low sell high that can lead to excessive loss which happened to me quite a bit during my early crypto days lol.
FOMO can be good (sometimes) but FOMOing on already 200% up projects can be bad IMO.
The fomo is created by those people who buy high and sell low. When something goes up %50 they suddenly got a lot of excitement over what that has already happened, they will write everywhere like "will bitcoin be 1 gajillion dollars!!!" and whatever which will create a huge FOMO. I personally do not think that any increase should be stay away deal, sometimes prices go up and follow that up with another going up, but why risk it? Buy stuff when they are low.
However what people who do FOMO and lose money defend themselves with the fact that when bitcoin goes down you can buy it and go up, but when some weird altcoin goes down it may actually stay low for a long time as well, because it is altcoin and it could never go back up if it is a scam altcoin so they try to get in whenever they can.