People with gambling issues or those influenced due to Fear of Missing Out (FOMO) are at a higher risk of experiencing financial and emotional damage in the crypto market, according to a new study.
This study involved 487 crypto investors and was published recently in the International Journal of Mental Health and Addiction. It explored the relationship between personality traits and the harms experienced from crypto speculation.
Financial losses and psychological distress were the most common consequences that investors reported. These were often accompanied by feelings of failure, anger and shame.
Interestingly, it wasn’t the amount of time or money someone put into crypto that determined the harm they experienced. Instead, traits like impulsivity, gambling tendencies and FOMO were the real predictors.
Problem Gamblers Likely to Mirror Gambling Habits in Crypto
Those experiencing FOMO were more prone to making hasty, uninformed investment decisions, exacerbating their risk in the volatile crypto market. The fast-paced and often hyped nature of crypto markets can intensify FOMO, leading to impulsive decisions without thorough research.
Problem gamblers were found especially vulnerable, as their approach to crypto often mirrored their gambling habits, leading to significant losses.
According to the study, while cryptocurrency investing is distinct from gambling, some individuals approach it with a gambling mindset, increasing their risk of harm. For example, investing large amounts in speculative tokens or frequently checking prices can reflect a compulsive engagement with the market.
Study Suggests Focusing on Trading Behaviors to Reduce Crypto Investment Harm
Further, the study suggests that focusing on trading behaviors, rather than just limiting investment amounts, could help reduce harm. It also stresses the importance of educating the public about the speculative nature of cryptocurrencies, so people can make more informed decisions. Those who invest without adequate information or who chase quick profits are more susceptible to negative outcomes.
Mental health professionals may also need to consider screening for risky trading behaviors, especially in those with gambling issues, to provide better support.
Overall, the study suggests that while crypto offers opportunities, it poses unique risks, especially for those with certain personality traits.
This research serves as a reminder that along with potential profits, there are real financial and emotional dangers that investors need to be aware of. It highlights the need for better education and mental health considerations to help people navigate the crypto space safely.
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