At first, Michael Walsh enjoyed the excitement of his new hobby of buying and selling cryptocurrencies. He started by investing £8,000 in various digital currencies as the cryptocurrency market grew in 2020.
But within months, the 42-year-old’s mood and behavior had changed. He was always tired as he regularly woke up at all hours of the night to trade and checked his phone every half hour.
He even missed the family vacation with his wife and two young children that he was looking forward to in Dubai so he could stay home and monitor his cryptocurrency trading positions.
Michael, whose name has been changed to protect his anonymity, is one of a growing number of cryptocurrency addicts whose lives have been changed by their trading habits.
GamCare, which operates the National Gambling Helpline, reveals it is facing an increase in calls from hundreds of investors who have lost thousands of pounds trading Bitcoin and other virtual assets.
Last year there were as many calls from people citing cryptocurrency addiction issues as in the previous four years combined.
In some cases, people have lost mortgage deposits and robbed loved ones to feed their trading habit.
Castle Craig, a rehab center 50 miles south of Edinburgh, says it has treated about 300 people with such problems since opening a clinic dedicated to cryptocurrency addiction in 2016.
Addicted: The National Gambling Helpline reveals it is facing a surge in calls from hundreds of investors who have lost thousands of pounds trading Bitcoin and other virtual assets.
Michael was hooked when his initial investment of £8,000 rose in value to £2.3 million in 2020. However, when it fell to around £1 million towards the end of the year, he became obsessed with regaining value again.
“I kept reading that it would only go back up and that it wasn’t at its peak,” he says. ‘My endorphins were shooting and I started to feel similar to the game. You never have enough money, but it wasn’t real money because I hadn’t cashed it in yet.
The ups and downs were intense. At one point, he bought a $1 coin that rose 2,000 percent in value within weeks and soon became worthless.
“That’s how quickly you can feel like the rug is being pulled out from under your feet in this type of operation,” he says.
With his profits dwindling and the market falling in May 2021, Michael fell behind on his job in the hospitality industry and skipped meetings to trade.
His younger brother eventually intervened, forcing him to sell around £80,000 of his cryptocurrency holdings in one go. Michael contacted the National Gambling Helpline and was referred for help.
‘I feel very lucky to have received help when I did. I could have easily lost everything: my wife, my children, my job and all our money. I didn’t realize that cryptocurrency trading had taken over my life and could have ruined it.’
Cryptocurrencies have been around for more than a decade, with the goal of providing a so-called digital currency independent of central bank interference, with faster payments recorded online using blockchain technology. The best-known and oldest version, Bitcoin, and rivals such as Ethereum, caught the attention of investors and experienced strong price increases in the low interest rate environment of the early 2010s and the pandemic.
According to a 2022 HM Revenue & Customs survey, up to ten percent of adults in the UK have held cryptocurrency. Most will have experienced huge rises and falls in the value of their holdings.
A single Bitcoin could have been bought for a few dollars in 2012, but it rose to almost $20,000 in 2017 and to a high of $70,000 in 2021 amid interest from banks and hopes that Bitcoin would be adopted as a form of payment in the stores. It then plummeted to just over $16,000 by the end of 2022, decimating the holdings of millions of traders.
Extreme volatility has continued, with Bitcoin surpassing $100,000 this month.
Cryptocurrencies are unregulated, so there is no one to complain to if you lose your money. Critics and regulators also warn that there is a high risk of scams and cyber attacks.
Some users have made profits with Bitcoin or other digital currencies, but there are warnings that trading them is more of a gamble than an investment, leaving hundreds of people addicted and facing huge losses.
GamCare claims that there is a link between harmful gambling and cryptocurrency trading. Its National Gambling Helpline has heard from hundreds of young adults who have suffered panic attacks after losing £50,000 deposits or opening 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 Injury Officer at GamCare. “However, what we have seen at the National Gambling Helpline over the last few years is that serious harm can happen if you go too far and it is not always the get-rich-quick opportunity that some people think it is.”
Tony Marini, senior specialist therapist at Castle Craig, says it is often linked to other addictions or behavioral problems. He says the lack of regulation of cryptocurrencies is dangerous as people can get hooked and not get the same protection as with other forms of gambling where companies allow people to set limits on their apps.
Gambling websites contain information and warning messages to help prevent people from becoming addicted; there is no need for cryptocurrency platforms to do the same.
The cryptocurrency clinic’s first patient came for treatment for drug and alcohol addiction, but it turned out he had won £750,000 trading Bitcoin and then lost £1.5 million in other forms of gambling and was buying prescription drugs to stay I wake up longer and trade.
Another had mental health issues after losing the codes needed to access his Bitcoin wallet.
“The effects are the same as those of a compulsive gambler and a cocaine addict,” says Marini. “It gets to the pleasure part at the front of the brain and you’re always trying to reach those effects, which often means chasing losses.”
“It’s just another form of gambling, but it’s harder to detect, as you may see a drug addict or alcoholic walking down the street, but a retail addict is trapped behind a computer screen.”
Experts warn that the 24-hour nature of cryptocurrency trading can create problems.
Mark Griffiths, professor of behavioral addiction at Nottingham Trent University, says any form of investing can be addictive, but what is important is how frequently the activity is done.
“The thing about cryptocurrency trading is that people can do it regularly throughout the day, whereas other forms can’t be done hour by hour,” he says.
“It won’t be addictive for everyone, but in general, the more you can do something, the more it will be associated with problematic behaviors.
‘It’s similar to other forms of gaming. That’s why you can’t get addicted to playing the lottery, since you only find out the result once a week, but slot machines can be addictive, since you can bet as many times as you want.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.