Bitcoin. Ethereum. Cardano. Binance Coin. Shiba Inu. Dogecoin. These are just a handful of cryptocurrencies among thousands that individuals can invest in. Trading cryptocurrency can be exciting, thrilling and gripping due to high volatility. While cryptocurrency can make for a great investment for some, it can also very easily spiral out of hand, lead to mental health challenges, 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 and year ahead may be particularly challenging for the average cryptocurrency trader or investor due to an anticipated market cycle coming to an end (in lieu of a “super cycle”). If Bitcoin's history is any indication, its value may drop by over 80%, and altcoins may capitulate much deeper.
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 or is experiencing mental health issues as a result of the crypto market.
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 very soon; 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 and consolidation period until the next market cycle begins. Crypto market cycles thus far have been 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, being used as exit liquidity, ending up 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:
What Are The Consequences of Cryptocurrency Addiction?
Cryptocurrency addiction can result in various life problems including but not limited to:
What Are The Signs and Symptoms of Cryptocurrency Addiction?
Signs and symptoms of cryptocurrency addiction include but are not limited to:
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:
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.
If you enjoyed this article you may also enjoy, "The Psychology of Buying High and Selling Low – How Emotions Impact Your Investments"
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