The Hidden Costs of Crypto Trading: Impacts on Mental Health

Crypto markets are notoriously volatile, with Bitcoin (BTC) sometimes rising by 20% overnight, only to lose the same amount by the morning. Traders, constantly glued to price charts and social media updates, often find themselves trapped in a cycle of hope, fear, and regret.

Given this context, it’s not surprising that recent studies have highlighted the significant impact of crypto trading on mental health. An extensive review from the National Library of Medicine (NLM) notes, “Cryptocurrency trading seems to resemble the high-risk, high-reward nature of gambling, potentially leading to serious psychological challenges for traders.”

The NLM report analyzed data from 11,177 participants across various countries. It suggests that crypto traders are more likely to experience anxiety and depression linked to negative trading outcomes. Moreover, traders can feel elation from gains but may also display addictive behavior, leading them to continue trading, even when facing losses.

The findings revealed that cryptocurrency traders experience higher levels of psychological distress, stress, anxiety related to COVID-19, and feelings of loneliness when compared to non-investors.

Crypto Traders Struggle With Extreme Losses and Suicide

The Reality of Loss and Its Consequence

Unfortunately, this situation is not mere speculation. Following the largest crypto market crash in history—where $19.36 billion was wiped off the market in just 24 hours—there were alarming reports of numerous crypto traders taking their own lives.

While exact data on this issue may be lacking, one staggering story emerged from the market crash. Konstantin Galich, known as Kostya Kudo, a 32-year-old Ukrainian crypto investor, was found deceased in his Lamborghini in Kyiv shortly after the crash.

Moreover, stories spread rapidly on platforms like Reddit and X, where traders lamented, “how they lost everything” and expressed their inability to share their experiences with family members.

Even if the outcomes were not as dire as Kostya’s, the emotional struggles faced by cryptocurrency investors can be similar. According to a 2023 global meta-analysis, individuals under financial stress are 74% more likely to consider suicide.

The Need for Industry Awareness on Mental Well-being

Given the alarming connection between financial stress and suicide rates, it's clear that the crypto industry must take steps to foster conversations around mental health.

David Kemmerer, co-founder and CEO of Coinledger, a crypto tax software solution, shared his experience with Cryptonews: he used to check Bitcoin charts the moment he woke up.

“It starts off thrilling, but over time, it wears you down. There’s no rest, and chronic arousal leads to decision fatigue and anxiety,” Kemmerer explained.

He emphasized that trading in crypto is akin to gambling, particularly in the way traders chase losses. Keil said, “Small wins act as reinforcement, making it common to want to recover losses, which increases the risk of addiction and mood disorders.”

Furthermore, Kemmerer pointed out that many traders equate their portfolios with their self-worth. When markets rise, they feel victorious, but a downturn translates not just into financial loss but also into a sense of personal failure. “There are no boundaries in this space, and the highs and lows often lead to anxiety, burnout, and depression—sometimes even suicide,” he stated.

In light of this situation, Kemmerer advocates for prioritizing mental health within the crypto sector. “Everyone in the industry should foster conversations about trader well-being and consider making it a standard practice, much like conducting security audits and compliance checks,” he urged.

Building Community and Finding Support

While discussions about mental health remain limited in the crypto sector, there are actionable steps that the community can take to promote improvement.

Kemmerer believes that crypto exchanges and platforms can help by encouraging users to take breaks after periods of high trading activity. He also suggested directing traders to mental health resources during market downturns.

For instance, “platforms could implement an order delay toggle to discourage impulsive trading. Another idea is a dashboard featuring a reality check modal for significant drawdowns, which requires users to pause and consider tax or realized loss projections,” he explained.

Shira Lazar, a mental health expert and founder of Creators 4 Mental Health, also stresses the importance of awareness and boundaries. She stated, “Just as people track their portfolios, they ought to monitor their mental well-being—how much time they spend online, their reactions to market fluctuations, and whether they find joy in their work.”

Lazar proposed best practices for maintaining mental health, such as taking screen breaks, establishing defined “trading hours,” and engaging in offline community activities. “Mental health is not separate from innovation—it sustains it,” she added.

Additionally, investors facing addiction or life-threatening thoughts might explore 12-step programs, similar to those for gambling or alcohol addictions. A recent article from a mental health publication notes that a program called “Bitcoin Anonymous” can provide essential community support for those grappling with Bitcoin trading addiction.

B.C. Kowalski, founder of the FrugalBC YouTube channel, also shared insights on the supportive nature of crypto communities. “I’m involved in Algorand communities and am beginning to engage more with Hedera communities,” Kowalski noted. “Sharing personal experiences with others who understand can significantly affect mental health. Others may provide solutions, and knowing that others face similar challenges is beneficial—it certainly has been for me.”

Seeking Help

If you or someone you know is experiencing difficulties, help is readily available. In the U.S., you can call or text 988 for the Suicide and Crisis Lifeline. In the U.K., contact Samaritans at 116 123. In Canada, reach out by calling or texting 988.

Key Takeaways

Crypto trading can significantly impact mental health, leading to anxiety, depression, and even suicidal thoughts.
Studies indicate that crypto traders are more prone to psychological distress compared to non-investors.
The crypto industry must prioritize the mental well-being of traders through better support systems.
Community support is essential for mental health; engaging with others in similar situations can be beneficial.