Bitcoin. Ethereum. Solana. Binance Coin. Shiba Inu. Dogecoin. These are just a handful of cryptocurrencies among thousands that individuals can invest in. Trading cryptocurrency is exciting, thrilling and gripping due to high volatility. While cryptocurrency can make for a great investment, it can also very easily spiral out of hand and develop into a problem or an addiction. A cryptocurrency addiction can be destructive and debilitating at any given time, but these next few months may be particularly challenging for the average cryptocurrency trader due to an anticipated market cycle coming to an end (in lieu of a “super cycle”). As such, it is important to consider signs and symptoms of cryptocurrency addiction, what potential problems can arise from cryptocurrency addiction, and what you can do for yourself or a loved one who has a cryptocurrency addiction.
What Is It About These Next Few Months That Pose a Particular Danger To Cryptocurrency Traders?
Cryptocurrency investors have patiently waited several years for what many cryptocurrency enthusiasts expect is likely to come in these next few months; the potential for massive profits with an anticipated “blow-off top” that has thus far occurred approximately every four years in the roughly 12-year infancy of Bitcoin, bringing the market cycle to an end. What historically tends to follow these epic price peaks is a massive depreciation of the entire asset class of up to 85% or more followed by a long-term bear market until the next market cycle begins. Market cycles are based on the production (or “mining”) of Bitcoin being cut in half (known as “halving”) approximately every four years. But we aren’t here to learn about the fundamentals of Bitcoin, however, if you’d like to learn more please read “Staring at Charts: Bitcoin and Cryptocurrency.”
The volatility of cryptocurrency and possibility to take hundreds or thousands or even hundreds of thousands of percentage gains in profits from an initial investment is in part what makes cryptocurrency so alluring, but also so addictive and dangerous. The euphoric highs and devastating lows can drive addiction for some cryptocurrency traders, as well as mental health challenges such as depression or anxiety. Therefore these next several months can pose a significant danger to some who are not careful, mindful or informed about the risks or the impact cryptocurrency can have on their wellbeing and general life, well beyond their bank account.
While there will be many winners, unfortunately there will be far more losers. According to some statistics, approximately 90% of cryptocurrency traders end up losing money on their initial investment. Those who did not invest early on will end up “FOMO’ing in,” that is, investing at high prices and essentially buying the top of the market only to be left “holding the bag,” a term used for those who have bought the top of the market while others sell, holding onto their losses to the very bottom or somewhere along the way.
There will also be those who may have invested early, or dollar cost averaged on their way through the market cycle but end up becoming greedy only to hold their investment through massive capitulation into a bear market. Many think they will outsmart the market; and while it is easy to have a plan, it is much harder to execute one. Akin to casino gambling, some will do very well, but most cannot outsmart the house. While cryptocurrency does not have a house, it does have professional investors, family offices, banks, hedge funds, corporations, traditional money managers, mutual funds, and other institutional players who often have the experience, technical understanding, research capabilities, management team, assets, and other abilities that put the average retail investor at a disadvantage.
But even for those retail investors who do make money, life changing money, it may not come without consequence. Making money is great, but at what expense? For winners and losers alike, the addictive nature of cryptocurrency trading can be dangerous; bringing about mental health issues such as anxiety, stress, or depression, and can develop into an addiction that causes preoccupation, obsession, insomnia, loss of interest in other activities or hobbies, loss of relationships, career problems, failure to take care of responsibilities, and a deterioration of mental, physical and spiritual health.
Why Is Cryptocurrency So Addictive?
Cryptocurrency trading is addictive due to a part of the brain that processes rewards and motivates behavior. A region of the brain known as the nucleus accumbens responds to experiences and acts as the brain’s reward system. When an individual has sex, takes drugs, drinks alcohol, eats ice cream, makes money, or engages in other generally pleasurable experiences the brain produces “feel good” neurotransmitters such as dopamine, resulting in the experience of pleasure. The brain, and subsequently the individual, want to maximize their sense of pleasure and therefore will commonly return to the stimulus, in this case cryptocurrency, and engage in it more frequently, obsessively, and compulsively over time.
Beyond the brain, cryptocurrency is also addictive for some of the following reasons:
- Unlike the stock market, cryptocurrency is open 24/7. With dramatic volatility and being able to trade with leverage in some states and countries, this creates a perfect storm for an immense dopamine rush that can be found at any time of day or night.
- Online retail exchanges that take minutes to set up and connect to a bank account coupled with access from mobile devices or other digital devices make cryptocurrency trading extremely easy to access and navigate. In a matter of minutes or even seconds one can buy or sell a digital asset.
- Cryptocurrency traders often feel that they have an edge or know something that others don’t. They may spend hours, days or weeks researching a particular cryptocurrency or be highly skilled in analyzing charts and other speculative measures. This is what is known as the “illusion of control,” and makes traders more inclined to take greater risks and engage with the market more frequently.
- Cryptocurrency has become more mainstream and acceptable, and therefore may be less likely to be questioned by loved ones as being problematic. This is especially true for cryptocurrency traders who are addicted and may have become experts at hiding their investing from others, making detection of a problem by family or friends challenging. Without intervention from loved ones, the problem may persist until it becomes extremely severe and destructive.
- Cryptocurrency traders do not profit on every single trade, but they do not take a loss on every single trade either. This “partial reinforcement” results in traders returning to the trading exchange even after a string of losses, believing that they will take profits in their next trade. This is especially true for first-time investors who may have profits early on, but not be so lucky as they spend more time investing.
- Cryptocurrency traders are frequently more emotionally attached to their losses than they are to their profits, even when they are of the same value. The individual may obsess over a $10,000 loss but be relatively emotionless to a $10,000 gain. The preoccupation with losses results in “loss aversion” where the trader will endlessly invest time and money to win back losses. This is what some refer to as “chasing a loss.”
- Cryptocurrency traders often overestimate the probability of making a profit on their trades due to their past success or even due to seeing successful trades of others. This skewed mindset is something known as “availability heuristic” and can contribute to crypto addiction.
What Are The Consequences of Cryptocurrency Addiction?
Cryptocurrency addiction can result in various life problems including but not limited to:
- Mental health issues such as anxiety, depression, irritability, and increased stress as well as suicidal thoughts related to feelings of shame or hopelessness surrounding finances.
- Financial problems resulting in severe debt, exponential borrowing (or stealing) and bankruptcy.
- Deterioration of relationships due to increased isolation, emotional neglect, lack of communication, mistrust, etc.
- Problems at work, school or other important obligations.
- Physical health issues such as headaches, stomach problems, ulcers, and insomnia.
- Increased risk of developing a substance abuse issue.
What Are The Signs and Symptoms of Cryptocurrency Addiction?
Signs and symptoms of cryptocurrency addiction include but are not limited to:
- Unsuccessful attempts at stopping or moderating cryptocurrency trading.
- Thinking about cryptocurrency when you are not checking prices or related news.
- Feeling guilty, shameful or regret about behaviors associated with cryptocurrency.
- Spending more money or time engaged in cryptocurrency trading than intended.
- Hiding losses from loved ones.
- Lying, stealing, selling assets, or borrowing to engage in cryptocurrency trading.
- Spending money on cryptocurrency trading instead of responsibilities such as food or bills.
- Difficulty concentrating on important activities such as work or school as a result of cryptocurrency trading.
- Loss of interest in non-related cryptocurrency activities, especially ones that you used to find enjoyable.
- Difficulty relaxing or sleeping due to cryptocurrency, or checking prices in the middle of the night.
What Can I Do If I Have A Cryptocurrency Addiction? What Is The Treatment For Cryptocurrency Addiction?
With an awareness of the problem and a desire to change there are certain steps one can take to abstain from cryptocurrency trading or moderate their trading. Practical steps can be taken such as:
- Deleting cryptocurrency related platforms from your mobile device and computer (ex: exchanges such as Coinbase). This includes social media or websites that may serve as a trigger for thoughts about cryptocurrency.
- Allowing a trusted loved one to monitor or oversee finances.
- Setting certain days or hours of the day for cryptocurrency trading and sticking to your schedule.
- Postponing the urge to check cryptocurrency prices or related news.
- Developing healthy coping skills including but not limited to nutrition, exercise, and meditation.
- Engaging in hobbies and leisure activities including spending time outside and socializing.
- Finding support from loved ones and/or joining a mutual help group such as SMART Recovery or Gamblers Anonymous.
If you are unable to stop or moderate trading on your own, you may need to seek out an addiction specialist that specializes in cryptocurrency addiction. Due to cryptocurrency being a relatively new asset class and subsequently new problem area, it may be challenging to find an expert in cryptocurrency addiction. As such, if you are seeking out a specialist in this area and having difficulty, you may want to look for a specialist in day-trading addiction, stock market addiction, or general gambling addiction. Although cryptocurrency has its own nuances, all of these various forms of addiction have foundational commonalities and similar treatment methods.
Treatment for cryptocurrency addiction will vary from person to person based on their history of cryptocurrency trading, past attempts at stopping or moderating, co-occurring mental health issues, and various other factors that should be taken into consideration. A common form of treatment for cryptocurrency addiction is Cognitive Behavioral Therapy, also known as CBT, which is a method of therapy that focuses on thoughts, feelings, and behaviors and works towards making behavioral changes based on underlying beliefs about self.
For those who don’t feel they have a problem or are ambivalent about receiving help, Motivational Interviewing, also known as MI, is an effective method of treatment that can help individuals view their behavior through a different lens and help to elicit behavior change. For those who may be resistant to receiving any type of help, an intervention by family, friends and other loved ones may be necessary.
A holistic approach to cryptocurrency addiction may also be implemented, helping individuals to identify other areas of their life that can be improved upon in order to enhance overall wellbeing. Areas such as sleep, nutrition, exercise, and other areas of self-care may be examined and improved upon. Holistic approaches such as meditation, mindfulness, or yoga may be utilized as well as alternative treatments such as wilderness therapy, equine therapy, or hypnotherapy among others.
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