Crypto traders anonymous: A new addiction takes hold for many as cryptocurrency goes mainstream - Fortune
Addicts are emboldened by media reports of crypto success stories: The unemployed brothers who turned $8,000 into $9 million; the 22-year-old high school dropout turned crypto millionaire. “People think they’re the next Warren Buffett because the currency has gone up,” says Peter Klein, a psychotherapist in London.
Klein started offering cryptocurrency addiction therapy in 2019 after receiving a deluge of inquiries, mostly from 17- and 18-year-olds. “Their parents were arguing, and they escaped by trading crypto,” he says. Today most of his crypto-addicted patients are 30 to 40 years old.
The scope of the problem in the U.S. is difficult to quantify. An estimated 46 million Americans now own cryptocurrency, NYDIG, a crypto trading service, recently found in a survey. It’s unclear how many of them are among the 2 million people who have a severe gambling disorder, plus another 5 million with a mild to moderate problem, according to the National Council on Problem Gambling.
Data from overseas provides a more detailed picture, though it’s still inconclusive. For example, in 2020, 1,732 Koreans signed up for cryptocurrency and stock-trading addiction therapy, versus 1,008 in 2019, according to the Korea Center on Gambling Problems. It’s impossible, however, to know whether the gain was due to an increase in crypto addiction specifically or compulsive stock trading—or both.
People think they’re the next Warren Buffett because the currency has gone up.Peter Klein, a psychotherapist in London
Meanwhile, Dr. Harun Olcay Sonkurt, a psychiatrist at Agri Research and Training Hospital in Turkey, recently published a study in the Journal of Gambling Issues about cryptocurrency and gambling-related disorders, based on a survey of 300 adult cryptocurrency investors in Turkey who had traded for at least six months. Two percent of those surveyed—a statistically significant amount, he says—displayed traits of addiction.
Those traits, as laid out by Paul Delfabbro, a gambling researcher at the University of Adelaide in Australia, involve five psychological red flags. Many of the warning signs are the same as for gambling addiction and stock-trading addiction. They include a preoccupation with trading to the exclusion of everything else, a fear of missing out, and a constant reliving of or regret over poor investing decisions. Then there’s what is perhaps the most dangerous sign of addiction: the illusion of control.
That’s when people with some investing experience overestimate their skill and ignore the role that chance plays in their trades, Delfabbro explains. When the market rises, it creates a false sense of invincibility that leads to greater risk-taking. Day trading and cryptocurrency addiction often go hand in hand, he adds.
But cryptocurrency addiction also has some distinctive wrinkles of its own. The 24-hour nature of crypto markets makes it more difficult for addicts to step back from than, say, day trading. Also, the huge volume of social media posts about cryptocurrency trading by influencers lends itself to crypto addicts constantly seeking out reinforcement online for their out-of-control trading habits.
One telltale sign of addiction, cautions Klein, the psychotherapist, is when people invest in lesser-known cryptocurrencies that are more likely to seesaw in value. The adrenaline rush of the big daily gains and losses can hook people in.
This spring, a slew of fresh calls came in to Klein related to eye-popping fluctuations in the value of Dogecoin, a cryptocurrency created as a joke in 2013 but that has since been taken more seriously. It ballooned 13,000% from January to May and then dropped 75% in a matter of weeks. “People were losing their fortune. Their anxiety was through the roof,” Klein says. He heard stories of people trading on the toilet or desperately swiping under the covers as their spouse slept.
In general, crypto addiction is treated with cognitive behavioral therapy and a 12-step program like those used in Alcoholics Anonymous and many other addiction-treatment programs. Therapists address the emotions driving the addiction, assess secondary issues like depression or substance abuse, and help patients develop strategies to overcome it. Specialized treatment ranges from one-on-one Zoom calls and office visits to inpatient programs, priced from $120 for a one-hour session, up to $90,000 weekly for a luxury inpatient facility in Switzerland.
A free alternative, or supplement to costly therapy, is to attend Gamblers Anonymous. For now, at least, there is no Crypto Anonymous.
Even for people who do have the means, only a handful of facilities offer treatment for crypto trading addicts. But more are adding it as demand swells and the medical world’s recognition of the problem grows.
One facility that’s considering a crypto-addiction program is the Maryland Addiction Recovery Center, outside Baltimore. Early this year, Zach Snitzer, the facility’s cofounder, was alerted to the problem by his clinicians. They had noticed an influx of patients who compulsively traded crypto and how real-world events, such as plummeting crypto prices and gyrations in the stock price of video game retailer GameStop, exacerbated the illness. “When you see Elon Musk tweeting about cryptocurrency or the New York Times covering it, it normalizes cryptocurrency investing,” Snitzer says.
Because crypto addiction was so new, he and his staff had to educate themselves about it. And even now, many details about the problem are still unknown. Snitzer’s center has added questions about cryptocurrency to the interviews it conducts with patients as part of the admissions process. The hope is that the data collected will help shed more light on what’s behind the disease and how to treat it.
Based on talking with patients, for instance, Snitzer says he’s noticed a correlation between cryptocurrency addiction and substance abuse. But he warns that it’s too early to know definitively.
The consequences of cryptocurrency addiction, or Bitcoin addiction as it’s sometimes called, are serious, sometimes to the point of addicts having suicidal thoughts. One psychotherapist spoke of a patient—a CEO in an unhappy marriage—who had said he was $40 million in the hole. On Reddit, people report emptying their 401(k)s and refinancing their homes to pull out cash to feed their crypto habits.
For his part, Ballai, the ride-share driver in Budapest, blames his binge partly on social media crypto-influencers who sell courses peddling unrealistic promises about the amount of money investors can make. “They don’t mention that most people fail,” he says. Ballai also points to the “pump and dump” scammers who promote certain currencies only to sell as prices rise, leaving the people they duped with big losses after prices inevitably tumble.
Ballai says he’s managed to break his addiction cycle on his own and hasn’t invested in months. “Now, I think about losing first, before making money,” he says. “I don’t want to get involved anymore. It’s not worth the stress.”
Compulsive cryptocurrency trading has many traits in common with gambling addiction. But there are also some key differences. Here’s what to look out for:
This article appears in the August/September 2021 issue of Fortune with the headline "Crypto's rise fuels a new addiction."