Cryptocurrency trading has moved into the mainstream in recent years—but can the nature of this activity put some of the people involved at risk of developing an addiction?
While most people who invest and trade in cryptocurrencies do not develop any pathological issues, some will engage in problematic behaviors that result in addiction, according to Aaron Sternlicht, a counselor and co-founder of Family Addiction Specialist in New York.
“Cryptocurrency addiction involves the persistent or recurrent pathological compulsion and obsession to engage in the behavior of trading cryptocurrencies despite negative consequences to personal and/or professional activities such as financial loss, disruption to relationships, career problems, mental health issues,” among others, Sternlicht told Newsweek.
“Trading becomes the primary activity of daily life and the individual feels an uncontrollable urge to continue trading and engage in crypto-related activities despite adverse effects,” he said.
This pathological trading leads to the the individual’s progressive loss of control over behavior, as well as tolerance and withdrawal symptoms.
“Tolerance includes needing to take larger financial risk in order to produce the same sense of excitement and pleasure, and withdrawal when not trading may include symptoms such as depression, anxiety, irritability, mood swings and insomnia, among many others,” Sternlicht said.
According to the Family Addiction counselor, some signs of cryptocurrency addiction include, but are not limited to:
- Unsuccessful attempts at stopping or moderating cryptocurrency trading.
- Thinking about cryptocurrency when not trading or when not engaged in cryptocurrency related activities such as checking prices or reading crypto-related news.
- Feeling guilty, shameful or regretful about behaviors associated with cryptocurrency.
- Spending more money or time engaged in cryptocurrency trading than intended.
- Hiding losses from loved ones.
- Lying, stealing, selling assets, or borrowing to engage in cryptocurrency trading.
- Spending money on cryptocurrency trading instead of responsibilities such as food or bills.
- Jeopardizing relationships, career, or educational opportunities at the expense of trading.
- Difficulty concentrating on important activities such as work or school as a result of cryptocurrency trading.
- Loss of interest in non-related cryptocurrency activities or hobbies, especially ones that you used to find enjoyable.
- Difficulty relaxing or sleeping due to cryptocurrency, or checking prices in the middle of the night.
As a result of the novel nature of cryptocurrencies—the technology first appeared just over a decade ago—and the fact they have only recently begun to reach mainstream adoption, crypto addiction has yet to be officially recognized as a mental health disorder among professionals and the scientific literature on the issue is almost non-existent.
“Although more research is needed, it is currently viewed as a sub-type of a gambling disorder akin to day trading addiction,” Sternlicht said.
While scientific studies on crypto addiction are hard to come by, anecdotal evidence indicates that the problem may be on the rise, in some locations at least.
“My practice… has received a notable increase in inquiries for our cryptocurrency addiction services over the past two years,” Sternlicht said. “Anecdotally we have also heard of a significant increase in cryptocurrency addiction. However, there is no known data that I am aware of to reflect the rise of the issue.”
Lia Nower, director of the Center for Gambling Studies at Rutgers University in New Jersey, told Newsweek that crypto trading, like other risky investments, is inherently addictive for some people.
“In our studies, we have found significantly more people trading crypto than five years ago,” she said. “Time will tell whether this continues to appeal to people and grow in popularity or whether it is a fad.”
“Excessive cryptocurrency trading can be a form of gambling,” Nower said. “You risk money on a highly volatile commodity in the hopes of making a substantial return. It is similar to gambling on high-risk stocks like margins and options. In fact, in one of our studies we found considerable overlap between those who traded high-risk stocks and cryptocurrency.”
Nower cited figures from recent research conducted by her center, which has yet to published, suggesting that between 5-6 percent of people who gamble in New Jersey are considered to be high-risk, problem gamblers.
In another unpublished study involving a representative New Jersey sample of 372 individuals who trade crypto, around 38 percent were deemed to be high-risk, problem gamblers—a “very high proportion”—because most also gambled on other activities. (Nower noted that the state is not necessarily representative of the rest of the country given that it tends to have higher rates of problem gambling than other regions.)
The addictive potential of crypto trading can be explained by its impact on the brain’s reward system, which bears similarities to other forms of high-risk gambling.
“When the price of cryptocurrency surges, the individual in an open trade receives a rush of dopamine, bringing about a feeling of pleasure,” Sternlicht said. “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, which are not as volatile (thus producing less dopamine) and have limited trading hours.”
“Over time individuals who become addicted to crypto trading become dependent on trading in order to induce excitement and pleasure in their lives.”
The “gamification” of cryptocurrency exchanges combined with the cartoonish nature of many alt-coins can also increase the addictive potential of the activity.
“Many cryptocurrency exchanges have game-like interface features, and many cryptocurrencies have fun and playful graphics and names,” Sternlicht said. “Dogecoin is a great example of this, but there are hundreds of others. The gamification of these platforms and assets can incite traders to invest real money in a trivial way.”
“This is especially true for young traders that may be more susceptible to the influence of game-like features. This is also further compounded by crypto-gaming, play-to-earn games, and NFTs [non-fungible token].”
According to Sternlicht, cryptocurrency addiction can fall on a spectrum of mild to severe, although he notes that the term itself can be problematic.
“The term ‘cryptocurrency addiction’ can be very stigmatizing and often implies a significant pathological impairment, whereas in reality the issue can be subtle and may be more appropriately referred to as ‘problematic cryptocurrency trading,'” he said.
“Irrespective of semantics, if an individual continues to trade cryptocurrency despite adverse consequences to their life then it is a sign of a problem that should be looked in to and in some cases may require professional help to resolve.”
If you or a loved one is struggling with cryptocurrency addiction, the National Problem Gambling Helpline can be reached 24/7 for free confidential support at 1-800-522-4700. The National Suicide Prevention Lifeline can be reached at 1-800-273-8255.