12/03/2024
It feels like everyone's talking about cryptocurrencies again. Sometimes it seems wherever you turn, there’s a news story or some content about Bitcoin, Ethereum, or another trending digital coin.
Like many, you might wonder if the prices will keep rising or suddenly drop. Volatility is the only consistent thing about the crypto world, and because of this it's very easy to see the similarities between trading in crypto and gambling.
The Psychology of a Bet: Trading vs. Gambling
Financial and gambling addiction experts argue that trading crypto is more like gambling than investing. Trading focuses on quick profits, staking large sums of money for fast returns. Which might sound familiar!
Crypto trading, much like gambling, can lead to rapid cycles of highs and lows that can completely absorb your attention.
The thrill of speculating, the allure of quick profits, and the cycles of loss chasing mirror the psychological patterns seen in gambling. The dopamine rush from a successful trade can be addictive, pushing anyone to chase losses or trade compulsively when losses start to occur.
Crypto Market Volatility
The cryptocurrency market is well-known for its wild price swings. In just a little bit of time, the largest cryptocurrencies like Bitcoin can go through huge changes in value. These shifts can be caused by a number of reasons, ranging from regulatory changes to social media hype. But it is usually a result of “momentum trading”: people seeing price changes reported in the news and experiencing a Fear Of Missing Out (FOMO).
But while price movements draw people in, buying cryptocurrency is just like making a bet as it’s an attempt at predicting the outcome of something uncertain. Whereas investing in, for example, an S&P500 tracker fund will very likely deliver substantial returns in the long term, the price of Bitcoin could theoretically go to zero as it has no underlying value or utility.
The Hidden Dangers of Trading
Recognising this risk of crypto trading is the first step towards safeguarding yourself. It's important to be proactive and vigilant, looking out for signs that indicate your involvement with crypto trading has become a gambling addiction.
The signs to be aware of if you’re trading crypto
- If you find yourself preoccupied with taking bigger risks, needing to spend more to get the same buzz or to feel excited
- Spending too much time glued to your screen, tracking every little fluctuation in the market
- When you start to drop hobbies or skip hanging out with friends and family because you'd rather be trading
- If trading feels more like a need than a choice — like you're driven by an unstoppable urge — it's time to step back and evaluate the impact it’s having on other areas of your life
- Notice if you're feeling stressed, anxious, or irritable, especially when you're not trading. If your mood swings with the market, it's a sign your emotional well-being is too tied to trading
- Starting to hide your trading activities or the extent of your losses from loved ones is a signal that you might be aware of a problem but are trying to avoid facing it. Believing you can “trade your way out of it” will only make the issue worse
- Using money that's meant for essentials, or even going as far as borrowing money or selling things to fund trading
- Continuing to trade despite clear negative impacts on your finances, relationships, or health
If you find yourself caught up in cryptocurrency and wanting to quit, remember that Gamban is here to help. We want to help set our users on a path to financial security through encouraging safer investments. We also partnered with Loqbox to help you rebuild your credit score.
While crypto might lead to short-term profits for some, the risk tolerance a person would need to trade something so volatile means that in the vast majority of cases they would experience losses in the long-term. Especially if they are already recovering from an addiction to gambling.
From August 2021, we decided to block trading platforms to remain the safety net our users rely on. Research undertaken by Gamban in June 2021 on whether different forms of trading can be considered gambling found an overwhelming proportion of the general public viewed investing in cryptocurrency as a form of gambling. The report can be found here.
Alongside installing Gamban across all your devices, seeking resources for addiction support can provide a comprehensive approach to addressing the harms arising from cryptocurrency trading.
It’s also important to know that if you’re struggling with debt, you are not alone. There are many organisations out there that can help you get your finances back on track. Find out more about these organisations here.
