The crypto world is well known for its volatility. Especially in the early days, digital assets experienced wild price swings, gaining or losing double-digits in the course of a day. It appears that the current bear market is no exception to this trend.
While wild price swings provide opportunities to make gains — if you’re lucky enough — the volatile behavior of digital assets can pose a threat to the mental and emotional health of investors.
Mental health is an extremely important aspect of human life, which, until recently, wasn’t given much importance in mainstream media and discourse. Finances and investments can play an important role in emotional well-being, while constant despair due to the volatility of the crypto markets can hurt.
This was well displayed after the Terra debacle, when the ecosystem’s stablecoin depegged, sending the crypto market as a whole into a spiral and eroding confidence in the crypto ecosystem.
Indeed, after the price crash, suicide hotlines for numerous countries appeared in the LUNA subreddit, as the savings and investments of many investors were wiped out in a matter of hours.
Fears and failures
Even when equipped with investment knowledge, beginners can make bad decisions under emotional pressure. In addition to technical and fundamental analysis, the right mental attitude plays an important role in trading. Under the pressure of emotions, rash acts can be committed, which usually cause mistakes and serious losses. These mistakes can be divided into several groups:
Gambler syndrome: New investors begin to open a large number of transactions without thinking them through. Premature exit from a deal: At the first successful transaction, beginners tend to quickly take profits and close the position prematurely. In this case, they lose part of the profits that they could gain. Dependence on other market participants: Many traders are guided by the signals and opinions of established market participants. To obtain the…
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