All Financial Wisdom

Cryptocurrecy Addiction is Real

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Volatility in the markets is inseparable from human passions. With volatility, comes the feelings of risk, emotion, extreme situations, compulsive monitoring of trades…and the downfall of many investors.

Actually no asset is alien to these types of dynamics. But after the fever of crypto-assets, new forms of this particular addiction now appear in specialized clinics. Yes, the particular characteristics of trading with crypto-currencies have special patients and doctors to deal with them.

The red line that divides the investment of bets is often indistinguishable

At the end of the day, said crudely, is not any investment ultimately nothing more than a simple bet? No matter how long we put it, no matter how much we decorate it, however much we try to disguise it, even for the most pragmatic and systematic investors, to guess the future is impossible.

If there is future risk, it is a bet; and there is always risk, since an unbreakable maxim of the market is that without risk, there is no benefit. Once can bet short, medium or long term, rationally or compulsively, once can use indicators or hunches … whatever, but the union of chance and money, when it is sick, has a name defined authentically by the Royal Academy of Language: “Pathological addiction to electronic or random games.”

The crypto-assets were not going to be an exception, but rather the assets that reinforce the rule

Crypto-assets have several characteristics that make one especially prone to developing certain pathologies. Often, the condition arises from the confluence of these exogenous factors with weak points of their internal and particular psychology. But it is also true that there are a number of factors common to all ludopathies and to all gamblers that allow one to bring up assets potentially more dangerous than others.

It is the feeling of risk that often ends up hooking these patients. In the end, with a disproportionate risk and without control, psychological dependence arrives along with sure economic ruin.

Crypto-assets have always been high-risk assets. And not only because of its low reliability as an investment value and because of the bubble we have warned about so many times, but also because of its high volatility in the markets. That volatility means only one thing in the glands of the gambler: more hormones in the bloodstream with each trade, with each look at the prices, minute after minute, hour after hour.

To the volatility must be added other dangerous companions of travel (or investment). They are liquidity (also called immediacy) and ubiquity (also known as compulsivity). Once the pathology is developed, whether it is diagnosed or not, it is difficult to escape from it.

Believe what you want to believe, not what it truly is

The crypto-assets have a very remarkable feature in terms of addiction. Often, the gambler tricks himself with philosophies that basically seek only to reinforce him in his incessant search for hormones (and gains). The whole philosophy that surrounds the crypto-economy can be a perfect disguise to be used as an excuse to self-convince that one is not gambling the savings of a lifetime, but is investing in the future that only a few can see. Thus the patient can easily self-exculpate and remain mired in blindness, reinforced by the fact that others have already taken over the immensely rich crypto-currencies in the past.

And one last ingredient for this poisonous potion, to which many are nonetheless immune, is the natural technical opacity inherent in the crypto-economy and the aura of exciting and (somewhat) mysterious future that surrounds it, at least as far as the great public is concerned. The reality of “Main Street” is that most of the investors in crypto-assets do not have enough training to understand crypto. Unfortunately, they do not quite understand what is behind those names of tokens.

The (relatively few) affected in a pathological way will not want to see it, but the therapies are there

The best demonstration that crypto-addiction is more a reality than a theory is that specialized hospitals in the treatment of gambling have released specific programs for the case of addicts to trading with crypto-assets.

This is the case of Castle Craig Hospital in Scotland, where they clarify that this addiction may remain, either framed within a general addiction to bets of any kind, or else be a dangerous obsession with its own entity. In this center, they treat both facets of the addictive pathology. Several specialists have already described how trading with crypto-assets is an authentic roller coaster at the neurological level, which entails dangers such as the development of a dangerous addiction.

As you may have read in the previous link, the new treatment of Castle Craig Hospital is only the response of the center to the significant increase in the specific demand for crypto-trading, which had been observed by many patients with addiction. However, the same sources clarify that it is relatively rare to find pathologies focused exclusively on trading with Bitcoin or other crypto-currencies, because the underlying problem is usually a more general gambling problem. But they emphasize that, although they mostly treat it as another type of gambling addiction, the reality is that it is a particularly addictive and aggressive modality.

The reasons why they understand that this is so are in line with what we explained before: this type of gambling is available to those affected 24 hours a day, it is continuous, permanent. And this inability to disconnect is precisely what most “hooks” gamblers in general. In the end, for the patient, it is not even about winning or losing, but to repeat over and over again and thus get the hormonal response of the emotion that invades them after each trade. Which investor has not experienced this emotion to a greater or lesser extent on more than one occasion?

The reality is that many of the crypto-addicts are also “hooked” to trading with other traditional currencies other than crypto-currencies, but it is no less true that crypto-trading gives them an extra dose of adrenaline given its market volatility. This specialized hospital points out that they estimate that there are many crypto-traders who have already developed a certain degree of addiction, who are not aware that being permanently and obsessively aware of the crypto-market is NOT normal.

Moreover, these traders are usually convinced that they are especially smart to have entered this crypto-market, and that they almost always believe that they are doing very well. In addition, the crypto-addicts are characterized by reacting viscerally and very aggressively to everything that calls into question their great vision of the future, and do not attend to the experience of the most veteran traders of the markets.

The best prevention is yourselves

We can not close this analysis without qualifying that what is written here only aims to warn of a pathology very common in the markets, but noticeably more dangerous in the case of crypto-assets. This does not mean that, in their theories of the future, these crypto-addicts can be quite right in certain points. In fact, from these lines we have shown ourselves to be on more than one occasion as declared crypto-enthusiasts. That’s not the problem. The most serious and difficult part of this addiction is to realize when crypto-economics is a theory, or a way of disguising a gambling addiction. And in the initial stages of this addiction, only you and your ability to see reality and make self-criticisms can you help you before it is too late and your savings have already been volatilized.

Even in the event that you have a positive balance in your current account, if you are one of those  people who spend 14 hours a day stuck to crypto-prices on the screen of your Smartphone without it being your professional activity, you should seriously consider if you have already passed the diffuse red line that separates normal traders from addictively compulsive ones.

As with many psychological conditions, it is really complex to realize (and even define a diagnosis for specialists) when something is normal and when it is not.

The best therapy is the one that does not need to be applied, so it is best to stay alert, control the exposure to the stimulus, monitor anxiety, be attentive to the responses of your body, and, above all…your mind. And think about whether spending so much time winning (and in many cases losing) money is worth it in the face of being with your children, talking with your partner, or hanging out with friends … Especially when you have the rest of your life to devote to all of this Enjoy the markets, (even the crypto-markets), but do not live for it: life is something else.

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