Financial markets and mental health issues are inextricably linked. Financial trading is fraught with risks, and sudden, significant losses of wealth have a detrimental effect on mental health. Cryptocurrency is the newest financial asset class on the market, and it has exploded in popularity, garnering widespread attention . However, this new digital asset has increased investors’ stress to previously unheard of levels. This article will explain why this is happening and how you, as a crypto investor, can cope.
Cryptocurrency trading has never been easier or more accessible than it is now, thanks to the proliferation of online exchanges and mobile device access. Attracted by few rags to riches stories, a large number of young and inexperienced traders have entered the crypto market. Many have never even witnessed the highs and lows of relatively stable equity trading. Unfortunately, cryptocurrency is not your conventional financial asset.
Cryptocurrencies are extremely volatile. What occurs in the equity market over months occurs within hours in the crypto market. Bitcoin, the most popular cryptocurrency, fell 74% in a matter of days in 2018. Today, in 2021, bitcoin is trading 50% lower than it was a month ago at its all-time high. These are significant price changes that are not for the faint-hearted. On the other hand, young and impulsive traders have taken on debt to invest in ostensibly lucrative altcoins or new cryptocurrencies as a result of dogecoin’s success.
As the popularity of cryptocurrencies such as bitcoin, and ethereum continue to grow, so do the online scams associated with these digital currencies.
Consumers reported losing nearly $82 million to crypto scams between the fourth quarter of 2020 and the first quarter of 2021, more than ten times the amount reported a year ago during the same six-month period. Scammers are constantly coming up with novel ways to dupe people into fraudulent cryptocurrency investments. One type of scheme directs consumers to fraudulent websites by offering investment “tips.” In another, scammers pose as celebrities, such as Elon Musk, and convince consumers to send cryptocurrency in exchange for a contribution from the celebrity.
Volatility at this scale has exacerbated mental health issues such as anxiety and depression. After having squandered their life savings by investing in scams, many resort to extreme steps of taking their life. As a result, the most popular cryptocurrency forum on Reddit regularly promotes a suicide helpline.
You definitely do not have to be pessimistic and abandon all interest in cryptocurrency. The reality is that it is the asset class of the future, in which everyone from businesses to ultra-high net worth individuals are heavily invested.
There is, indeed, a need to exercise caution and to invest only after conducting due diligence. Discipline must be developed in order to resist being swayed by flashy marketing or to succumb to instant urges to purchase something that promises a 1000X return on investment. Small initial gains may cause traders to become overconfident and overlook the importance of thorough research. Bear in mind that not all that glitters is gold, or in this case, bitcoin.
Various crypto asset management products have been developed to identify and promote legitimate projects and protect investors’ interests. Mudra, a leading asset manager for the Binance Smart Chain (BSC) blockchain network, has launched several ground-breaking investment and development products. For example, Mudra Token Research is the first comprehensive token scanning tool. Through blockchain data analysis and token smart contract code, Mudra Research assists investors in avoiding common scams such as ‘honeypots’ and ‘rugpulls’. Mudra also provides a liquidity locking facility to prevent fraudulent project owners from draining liquidity funds. Maintaining current knowledge of such products and practices protects investors from being duped.
Individuals should invest only the amount of money that they can afford to lose. They must limit their exposure to cryptocurrencies to a certain percentage of their net worth. Too many people are having fear of missing out “FOMO”, jumping in and wagering the entire ranch. They lack the discipline necessary to recognize the importance of adhering to their asset allocation models. Excessive trading is similar to gambling; always start small and gradually increase your stakes. In the long run, if you are consistent and diligent, you will always earn handsome profits.
Finally, be mindful and aware of any stress or mental health problems that your behaviors may be causing, and speak with a trusted support person or mental health professional about any concerns you may have.
While digital assets such as cryptocurrency are the asset class of the future, they are still in their infancy and are subject to extreme volatility. Due to the cryptocurrency space’s decentralized, anonymous, and regulatory-free nature, they are also extremely susceptible to scams. Investors should always conduct due diligence and invest only what they can afford to lose.