Cryptocurrency and volatile trading: A mental health edge?

By now, you might have heard about the brilliant world of cryptocurrency and how it might be changing lives both monetarily and emotionally.

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Without going into too much detail about all the different kinds of coins out there to trade, there are well-known ones like Bitcoin and Ethereum to the even riskier ones like Doge and Shiba Inu, or "meme" coins that become trends in part due to a social media push. 

These coins traded on exchanges like Coinbase and Binance can either profit you tens if not hundreds of percentage gains in a matter of days or weeks, and the prices of these coins can drop in price quicker than a trip to the grocery store.

Trading cryptocurrency can make your feel a quick sense of joy, pride, relief and panic in a short time. It can give off a sense of confidence you did not know you had, while also making you feel full of regrets. It is not unlike gamblers who have an addiction. However, the crypto marketplace, in general, is becoming much more widely accepted, institutionalised and regulated.

It can make you feel as if you have a mental health edge, perhaps thinking you are ahead of the game, making wise financial decisions, but what else can it make you feel? It has been written about before (Delfabbro, 2021) but we will go into a bit more of a deep dive into this and how these behaviours can affect our mental health.


Three behavioural consequences of cryptocurrency

Continual Obsession

If you always knew you wanted to be a day trader, then you might see cryptocurrency trading as a great opportunity. It is a market that is open 24 hours per day, even on holidays. There are usually new coins entering the market and you do not have to only use main cryptocurrency exchanges like Coinbase or Binance to trade.

What this can bring though is a continuous "on" switch that does not turn off. You might continuously look for the next play, the next coin that will jump up in percentage. You might check message boards to see what people are saying about the coin, read white papers that are often accompanied by the projects represented by the coin, who the developers of the coin are and think to yourself, let me invest. 

But then, when the coin starts fluctuating, you read what is happening around the world with wars, rising inflation numbers and a struggling economy, you buy, sell, second guess all in a matter of hours.

The point here is that your thinking about cryptocurrencies can become an obsession. If your goal is to make many trades over the course of a day or days, then trading might not affect you mentally, but if you worry over volatility, these obsessions could lead to feelings of anxiety and even depression.

Becoming influenced

The cryptocurrency market and the act of trading does not have to feel as if you are solitary. For many, it can seem like a community, a community where you become influenced. Some people trading crypto may enjoy the solitary environment. You can trade from home, on your computer or your mobile phone, but unlike other team working atmospheres, you are on your own when trading. It is up to you to hit the button. It is up to you to do the research on which coin you will trade.

But that is a good question: How do you get your research? 

As previously mentioned, new coins come up all the time. If you go to coinmarketcap, you will see a full list of coins, their trading price and even new coins that you can trade. But what you will find is that when you click on a coin on that website, you can scroll through the coin's profile, and then read comments on people who have bought into or are looking to buy into the coin.

Whether it is on that website, or through other social media like Facebook, Twitter, Stocktwits or by watching a YouTube video, you can start to feel influenced by what you read on social media. Some traders may relish this idea. Being a part of a community that has invested in a coin and wanting to connect with others about it, to share their successes or their failures.

You may have heard Elon Musk tweeting about Dogecoin in 2021 which may have caused many to buy and sell. The point here is that you can be influenced very much by what you read on social media. It is true that you can be influenced by social media to buy many things, but this is particularly true in the cryptocurrency trading world.

Giving into fear

When it comes to trading different cryptocurrencies, you can be influenced by what you read and see.  In particular though, what you read about when it comes to trading might lead to fear. Specifically, a fear of missing out, or FOMO as it is often called in trading circles.

When the value of one of the cryptocurrencies goes up in a matter of days, perhaps by 30 percent, or you read comments on social media, or watch a video on YouTube of the promise of a coin, you might think, "I need to invest in this coin now or else I will miss out on large gains." The same goes for when a coin drops in price. Instead of selling after making a profit, when the value of the coin drops, you might think to hold on to the coin because it will go back about and you could make 40 times the price a year from now, or two years from now. 

While this article is not meant to give any financial advice, what is very real is the fear you can feel of missing out on the next biggest crypto, or when to sell after making a profit. You can ask many day traders of stocks about this, but particularly in the cryptocurrency world, with so much volatility, the fear for some can be motivating, and the fear for some can be debilitating.

Between the elements of obsession, being influenced and fearful, does trading in cryptocurrency give a mental health edge? What we see from these examples is that thinking about it a lot can affect our mental health. It is all the more reason to think about other activities to distract yourself and take you away from trading, or to seek focus on activities you might have more control over to combat feelings of anxiety, depression and pressure you may feel. 

However, it may seem like trading cryptocurrency can tip you in the wrong end of the mental health edge, but there are people who might gain satisfaction and even develop a lifestyle in learning to trade cryptocurrency that can help them gain a mental health edge by making them more aware of their own behaviours and thought processes.

Whichever edge you find yourself leaning towards when it comes to trading, much like the cryptocurrency field itself, you do have options in different ways of feeling, thinking and adapting to make it work for you.

Counselling Directory is not responsible for the articles published by members. The views expressed are those of the member who wrote the article.

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London, Greater London, SW6 3PA
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Written by Dr Joshua Bourne
London, Greater London, SW6 3PA

Joshua is a Counselling Psychologist registered with the BPS and HCPC and founder of the Psychology Practice Bourne Path. He has over 8 years of training and work experience offering evidence-based practice in the field of Psychology, both in therapeutic and business psychology contexts. He invites you to visit his profile for more information.

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