A new study published in the International Journal of Mental Health and Addiction suggests that it is not how often people engage in crypto trading, but how they trade that matters most. According to the study, individuals who opt for riskier assets over safer ones, or who invest with limited information or without a clear strategy, are at a higher risk of experiencing "harm." Harm is typically defined as the negative consequences arising from excessive engagement in an activity and is central to public health approaches to addiction.
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In this correlational study, researchers examined the most prevalent forms of harm associated with cryptocurrency speculation and how these are linked to known risk factors such as fear of missing out (FOMO), impulsivity and problem gambling.
Crypto prices are often strongly influenced by hype, social media influencers and are characterised by strong periods of price appreciation followed by large price depreciation. The researchers recruited 487 crypto investors from an online panel and measured their crypto engagement, impulsivity, FOMO, problem gambling and the types of harm experienced that could be at least moderately be attributed to cryptocurrency. It was observed that problem gambling scores (PGSI) and FOMO scores were reliable predictors of the level of harm reported, with the strongest model obtained for financial harm.
The findings suggest the need to screen for speculative trading in gambling studies and that resistance to FOMO is an important element that would need to be targeted in clinical interventions for people experiencing harm.
It has already been observed that cryptocurrency traders are vulnerable to some of the harms prevalent in gambling. A 2022 study by Oksanen et al found that cryptocurrency traders reported higher levels of mental health disorders, psychological distress, and perceived loneliness compared to non-traders. Additionally, crypto market traders scored significantly higher in alcohol use and excessive gambling.
Cryptocurrency is not yet formally recognised as an addiction, but the latest study indicates that certain individuals may be more vulnerable to harm than others. The researchers concluded that these findings highlight the need for more detailed studies on the relationship between risk factors and specific trading and investing behaviours. They also emphasise the importance of ongoing public education about the risks and protective factors that can promote safer investment in these speculative markets.