It attests that fears of how unregulated crypto trading, promulgated by social media, leads to irresponsible investment decisions are now coming true.
Crypto Under the Spotlight
The report highlighted a specific case of a man who had a well paying job whose life collapsed as he fell into addiction to alcohol, drugs and compulsive trading.Initially he did well, but soon the “fog” led him to lose the addresses of several Bitcoins now worth around $300,000.
He spoke about how the move of crypto into the mainstream is leading many others to follow his path because of trading without a proper plan and only following social media chatter.
This story highlights the danger of not learning the fundamentals of trading, a route that will only lead to losing money and misery.
Most governments around the globe have declined to regulate cryptocurrency transactions, meaning that hard sell advertising can lure people into losing money that they can’t afford to. Only last week celebrity Kim Kardashian and superstar boxer Floyd Mayweather came under fire for making “false and misleading” statements when promoting crypto firm EthereumMax.
The boss of the UK’s Financial Conduct Authority (FCA) said Kardashian’s promotional post on Instagram might well be the widest reaching financial promo in history to more than 250 million people.
Addiction expert Dr Anna Lembke showed extreme concern over how social media is pushing the unprepared into compulsive behaviour in the trading world.
“When you mix social media with financial platforms, you make a new drug that’s even more potent,” she says.
“You get this herd mentality where people talk to each other about what the market is doing, they have wins together, losses together, … an intense shared emotional experience.”
“We get a little spike in dopamine, followed by a little deficit that has us looking to recreate that state.”
Top trading platform eToro explained how it does the utmost to encourage learning through collaboration and has gone out of the way to produce a website that is not “gamified”. It added that educational tools are provided for free, know-your-customer checks are carried out and long-term investing is strongly encouraged.
There is an important lesson here. Successful traders and investors make profit via deep preparation and a solid plan. Paying attention to social media and following the crowd is never going to bring success.
The number of free tools provided on trading platforms are there for a reason: use them.
