Losing Money in Crypto Can Be Devastating – Resources for Mental Health Help
The beauty of crypto lies in its openness, global reach, and fundamental utility.
These factors differentiate it from other asset classes.
Getting started in crypto doesn’t require one to get accreditation or to register/seek approval from the regulator.
This industry is one big court, with open arms.
Volatility could be the draw. While more investors show off their wealth, their trading history all in green with flashy sports cars to go along, behind those trading windows are thousands more who are struggling to stay afloat.
The latter group is sinking deeper in red with every green candlestick. These are folks whose lives may change forever once the house calls, liquidating their assets and sending them into financial hopelessness.
It gets worse; the volatility of cryptocurrencies and the absence of fitting, investor-protecting regulations in many zones amplify the risk of loss for traders.
Already, grim statistics place the “house”—that is, the exchange—ahead of every trader. The skew means that only five percent of traders are consistently profitable. A big chunk, 95 percent, are losing their shirts every day. This data applies to Forex trading, which is regulated.
Extending the same to crypto, where most exchanges are not regulated, and the volatility of crypto translates to an even higher percentage of losses.
Furthermore, the U.S. SEC stated that they did not approve Bitcoin ETF because the crypto scene is manipulated due to inadequate monitoring tools. These could be red flags for any trader who wants a level playfield to make money and likelihood from Bitcoin and crypto.
Still, the excitement, hopium, FOMO, and FUD make crypto unique, attractive, stimulating, and “no short of action,” addiction, so much that psychologists say crypto is a rich ground for studying human behavior.
Psychologists have amorphous, somewhat disjointed data (but enough to give a rough idea) to link the crater-jack rise of crypto—the “phenomenon”—to mental health, and the results are back.
They aren’t good.
The verdict is that the undulating euphoric rise and fall of cryptocurrencies continue to spellbind more traders, forcing them to stare at price charts all day, hooked to the dopamine of crypto volatility.
And this is bad for mental health.
Extreme euphoria rallies and devastating dumps punctuate cryptocurrencies, making the sphere exciting and even more stimulating to trade, a drawer for millions more.
However, from an objective analysis, this gyration is the cause of damaging addiction but is damaging since they are all the hallmarks of addiction.
The urge to trade and place compulsive bets on cryptocurrencies is progressively becoming a problem globally.
It is even a problem for psychologists because the sub-sector is relatively new, and even less research has been done in psychology for proper classification of what entails cryptocurrency addiction.
Cryptocurrency addiction, for now, is classified as a sub-type of day-trading addiction that bears similarities with gambling disorder.
For clarity, there is nothing inherently wrong with trading cryptocurrencies. Just like there is nothing wrong with participating in FX, stock trading, and more.
The problem lies in the nature of trading itself. There is instant gratification whenever a take-profit target is hit. Coupled with the huge swings, their risk for addiction is amplified.
How then do you know, despite a string of losses and superficial “immunity” against volatility, will you know of your crypto trading addiction? There ought to be signals when you find yourself increasing risks without an apparent strategy, especially when “chasing a loss.” Second, you have a compulsion to check crypto prices constantly. Because of this, a trader tends to lose interest in social or leisure activities. Fifth, your trading becomes compulsive, and you always learn to engage in a trading activity even when there are no signals. Sixth, mostly because of the string of losses, a trader hides trading activity from loved ones. However, one clear addiction symbol that could potentially wreak havoc is a trader always placing trades despite continuous losses destabilizing his/her finances, relationships, and mental wellbeing.
If you meet even one of the above criteria and symbols, a trader should immediately make a reassessment and take a close look at their trading behaviors.
To help dig yourself out of the crypto and Bitcoin trading addiction hole, a trader should invest more in learning to be aware that the first and hard-fast rule of any investment is not to get involved in a field you barely understand.
Then develop a schedule, develop a strategy, and always never invest money that you can’t afford to lose. When trading, take rests and even engage in other activities like meditation or reading.
Should it be a compulsion, help from loved ones can be sought to stop crypto trading altogether. Medication and medication might help and is also where practical steps such as blocking bank accounts, crypto trading exchanges, and crypto-related materials may come in handy as part of therapy.
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