An often overlooked aspect of the cryptocurrency market’s reputation for volatility is the effect sudden market changes can have on the
An often overlooked aspect of the cryptocurrency market’s reputation for volatility is the effect sudden market changes can have on the mental health of traders and investors.
Addiction to day trading, or pathological trading, is already well-known among stocks and commodities traders and has been extensively documented by medical professionals. There are even rehab programs devoted to treating day-trading addiction.
With its possibility of “life-changing” money for those lucky or savvy enough to catch it, the crypto market has generated its fair share of trading addicts.
To get a better understanding of the mechanics of cryptocurrency trading addiction and how to recognize it, Magazine sat down with Tony Marini, senior specialist therapist at Castle Craig Rehab in Scotland, and Aaron Sternlicht, co-founder of New York-based private practice Family Addiction Specialist.
What is cryptocurrency trading addiction?
Sternlicht defines cryptocurrency trading addiction as the “persistent or recurrent pathological compulsion and obsession to engage in the behavior of investing in or trading cryptocurrencies despite negative consequences to personal and/or professional areas such as financial loss, disruption to relationships, career problems, mental health issues, and other such negative consequences.”
He believes that addictive behavior goes well beyond just buying and selling tokens. When a trader’s time is fully consumed with chart analysis, market research, data review, fundamental analysis or investor sentiment, there may be a problem.
It’s all about neurotransmitters
The body makes a neurotransmitter called dopamine that the nervous system uses to deliver messages between nerve cells. Sternlicht says that when the price of crypto goes up and someone completes a successful trade, they receive a rush of dopamine, bringing about a feeling of pleasure.
“The volatility of cryptocurrency coupled with the fact that it can be traded 24/7 can result in excessive and regular boosts of dopamine that make it much more addictive than trading other assets such as stocks,” Sternlicht says. Over time, those who develop an addiction to cryptocurrency trading come to depend on it to bring on excitement and feelings of pleasure.
Sternlicht says some stimuli that release excessive amounts of dopamine — such as sex, drugs, video games and social media — are more likely to become addictive. He believes that due to volatile price fluctuations, successful cryptocurrency trades fall into that category.
On the flip side, other natural pleasures like eating a great meal or watching a beautiful sunset can become less stimulating and less appealing. “The individual becomes preoccupied with their stimuli of choice while losing interest in other life experiences that they used to find enjoyable, as it is the brain’s natural inclination to seek out pleasure,” Sternlicht says.
Marini points out that not everyone will become a compulsive gambler, a cocaine addict, an alcoholic or a crypto trading addict. But he believes that 3% of Brits are compulsive gamblers. The UK Health Security Agency (formally Public Health England) has estimated that about 2.2 million adults are problem gamblers or are at risk of addiction. Both Marini and Sternlicht agree that cryptocurrency addiction is very similar to gambling addiction and is treated as such.
With 33% of the country participating in the cryptocurrency market, Marini worries that he’s just seeing the tip of the iceberg. “I was finding there were more and more people coming through the doors that had been really drawn into cryptocurrencies,” Marini says.
Since 2016, Castle Craig has had over 200 clients come in with cryptocurrency trading addiction. Marini believes cryptocurrency draws people in much quicker than gambling because of its volatility. “They were looking at the pricing constantly because it fluctuates all the time. And with over 20,000 different cryptocurrencies now, they’re spending so much time on different media sites watching the cryptocurrencies, and that is becoming a problem in their life,” Marini says.
Still, according to Sternlicht, most people can trade crypto without worrying. “Although most individuals can invest in and trade cryptocurrencies without developing a pathological issue, some individuals develop pervasive impairment related to their trading behavior that results in addiction,” Sternlicht says.
Who is at risk?
Although there is no way to determine precisely who will develop an addiction to cryptocurrency trading, Sternlicht believes that those with frequent exposure to crypto, those who have experienced other addictions, or those who have had problematic gambling experiences are more susceptible. Family history of addiction, underlying mental health issues, impulsivity or risk-taking personality…
cointelegraph.com