At first, Michael Walsh enjoyed the excitement of his new hobby of buying and selling cryptocurrency. He started by putting £8,000 into several digital currencies as the cryptocurrency market boomed in 2020.
But within months, the 42-year-old’s mood and behaviour had changed. He was always tired as he was regularly waking up at all hours of the night to trade – checking his phone every half hour.
He even missed the family holiday with his wife and two young sons that he had been looking forward to in Dubai so that he could stay at home and monitor his crypto trading positions.
Michael, whose name has been changed to protect his anonymity, is one of a soaring number of cryptocurrency addicts whose lives have been turned upside down by their trading habits.
GamCare, which operates the National Gambling Helpline, reveals it is facing increased calls from hundreds of investors who have lost thousands of pounds trading Bitcoin and other virtual assets.
Addicted: The National Gambling Helpline reveals it is facing increased calls from hundreds of investors who have lost thousands of pounds trading Bitcoin and other virtual assets
It took as many calls from people citing problems with cryptocurrency addiction last year as it did in the previous four years combined.
In some cases, people have lost mortgage deposits and stolen from loved ones to feed their trading habit.
Castle Craig, a rehabilitation centre 50 miles south of Edinburgh, says it has seen about 300 people with such issues since it opened a dedicated cryptocurrency addiction clinic in 2016.
Michael got hooked when his £8,000 initial investment surged in value to £2.3 million in 2020. However, as it dropped to about £1 million towards the end of the year, he became obsessed with getting the value back up again.
‘I kept reading that it would only go back up again, and that it wasn’t at its peak,’ he says. ‘My endorphins were rushing, and it started to feel similar to gambling. You never have enough money, but this wasn’t real money as I still hadn’t cashed it in.’
The highs and lows were intense. At one point he bought a coin worth $1 that increased 2,000 per cent in value within weeks – and was completely worthless shortly after.
‘That’s how quickly you can feel the rug being pulled from under your feet in this type of trading,’ he says.
With his earnings dwindling and the market tumbling around May 2021, Michael fell behind in his job in the hospitality industry, skipping meetings to trade.
His younger brother eventually intervened, forcing him to sell about £80,000 of his crypto holdings in one go. Michael contacted the National Gambling Helpline and was referred for support.
‘I feel very lucky to have got help when I did. I could so easily have lost everything – my wife, my boys, my job and all our money. I hadn’t realised that cryptocurrency trading had taken over my life and could have ruined it.’
Cryptocurrencies have been around for more than a decade, aiming to provide a so-called digital currency independent of the interference of central banks, with faster payments recorded online using blockchain technology. The best-known and oldest version, Bitcoin, and rivals such as Ethereum, caught the eye of investors and saw wild price rises in the low interest-rate environment of the early 2010s and the pandemic.
As many as ten per cent of adults in the UK have held cryptocurrencies, according to an HM Revenue & Customs survey carried out in 2022. Most will have experienced huge rises and falls in the value of their holdings.
A single Bitcoin could have been purchased for a few dollars in 2012 but rose to almost $20,000 in 2017 and a high of $70,000 in 2021 amid interest from banks and hopes that Bitcoin would be adopted as a form of payment in shops. It then plunged to just over $16,000 at the end of 2022, decimating the holdings of millions of traders.
The extreme volatility has continued, with Bitcoin surpassing $46,000 last month when America’s Securities and Exchange Commission (SEC) gave Bitcoin more legitimacy by approving the launch of Bitcoin-exchanged trading products for US investors. It has since dropped to about $42,000.
Cryptocurrencies are unregulated, so there is no one to complain to if you lose your money. Critics and regulators also warn there is a high risk of scams and cyber attacks.
Some users have secured profits from Bitcoin or other digital currencies, but there are warnings that trading in them is more of a gamble than an investment, leaving hundreds addicted and facing huge losses.
GamCare claims there is a link between harmful gambling and crypto trading. Its National Gambling Helpline has heard from hundreds of young adults who have suffered panic attacks after losing £50,000 deposits or setting up secret bank accounts to feed a cryptocurrency trading habit.
‘For many consumers, cryptocurrency purchases are a way to diversify their investment portfolio,’ says Raminta Diliso, financial harm manager at GamCare. ‘However, what we have seen at the National Gambling Helpline over the past few years is that serious harm can occur if it goes too far and it’s not always the get-rich-quick opportunity some people may think it is.’
Tony Marini, senior specialist therapist at Castle Craig, says it is often linked to other addiction or behavioural issues. He says the lack of cryptocurrency regulation is dangerous as people can get hooked and don’t get the same protection as with other forms of gambling where companies let people set limits on their apps.
Gambling websites contain information and warning messages to help prevent people from becoming addicted – there is no requirement for cryptocurrency platforms to do the same.
The cryptocurrency clinic’s first patient came in to be treated for drug and alcohol addiction, but it turned out he had made £750,000 trading Bitcoin and then lost £1.5 million on other forms of gambling and was buying prescription drugs to stay up longer and trade.
Another had mental health issues after losing the codes needed to access his Bitcoin portfolio.
‘The highs are the same as a compulsive gambler and cocaine addict,’ says Marini. ‘It hits the pleasure part of the front of the brain and you are always trying to get those highs which often means chasing losses.
‘It is just another form of gambling but it is harder to spot, as you can see a drug addict or alcoholic walking down the street, but a trading addict is stuck behind a computer screen.’
Experts warn that the 24-hour nature of crypto trading can create issues.
Mark Griffiths, a professor of behavioural addiction at Nottingham Trent University, says any form of investing can be addictive but it is about how often the activity is performed.
‘The thing about crypto trading is that people can do it regularly throughout the day whereas some other forms can’t be done on an hour-by-hour basis,’ he says.
‘It won’t be addictive for everyone, but generally the more something can be done, the more it can be associated with problematic behaviour.
‘It is similar to other forms of gambling. That’s why you can’t be addicted to playing the lottery as you only find out the result once a week but slot machines can be addictive as you can gamble as many times as you like.
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