depression

‘Everything bubble’ bursts: Worst year for US stocks and bonds since 1932

While the crypto markets have taken a bashing in 2022, it hasn’t exactly been rosy for US stocks, bonds and real estate either.

It’s been a torrid year for investors, and not just those in crypto, with United States (U.S.) bonds experiencing their worst year in centuries and U.S. stocks pulling back nearly 20% since 2022 began.

As of Nov. 30, a Financial Times report noted that a traditional portfolio consisting of 60% stocks and 40% bonds will have seen its worst performance since 1932, when the U.S. was in the midst of the Great Depression.

*Nominal return for US stocks and bonds from 1871-2022. Source: Financial Times.*

Meanwhile, tech stocks, which some theorize have a correlat i on with cryptocurrency prices, haven’t had a great year either.

An index tracking the performance of U.S. companies in the industry recorded a loss of 35.76% for the year.

Household tech giants such as Netflix, Meta, Zoom, Spotify and Tesla have all had particularly difficult years as well with their share prices falling in the range of 51% and 70%, according to Yahoo Finance.

Even the “safe as houses” real estate sector has started to show signs of pain, with the most recent data from the Federal Housing Finance Agency showing that U.S. house prices were stagnant through September and October.

*Return for an index tracking the stock performance of U.S. companies in the technology industry throughout 2022. Source: S&P Dow Jones Indices.*

These stock and sector declines may help put the current crypto winter into better perspective, noting that total crypto market cap fell from $2.25 trillion to $798 billion throughout the year, representing a drop of 64.5%, and crypto billionaires recorded huge losses.

Some of the crypto crises that have occurred throughout 2022 include the bankruptcies of FTX, Celsius and Three Arrows Capital, as well as the collapse of the Terra network, among others.

According to a Dec. 30 tweet by investment analyst Andreas Steno, “every single asset class” is down significantly in 2022, and real estate is soon to follow.

Every single liquid asset class is down A LOT this year and yet I keep hearing that Real Estate will whether the storm OK

No it will not.. It just lags.

— AndreasStenoLarsen (@AndreasSteno) December 29, 2022

How to control stress and depression in a crypto winter?

Avoid considering digital currencies as your principal source of income to safeguard your mental health throughout this crypto winter.

Trading is not the only way to explore the world of digital currencies — you can create content, make Youtube videos, listen to podcasts, etc. When your friend or relative shares their success with crypto trading, you also feel driven toward it. As a result, people start with a minor trade and then expand to earn more substantial profits.

Considering the volatility of crypto assets and the 24/7/365 live market, people need to watch the market movements constantly to avoid losing money. This may result in a disruption in sleep, fatigue and increased anxiety, and it propels a fear of failure among traders.

In this article, we will discuss how to avoid crypto addiction, and how crypto traders can control the stress and depression linked with cryptocurrency investments during the upcoming crypto winter.

What is crypto addiction and how to avoid it?

When you keep playing with crypto projects despite losing your sleep, appetite or even money, you are exhibiting the symptoms of crypto addiction. Also, you don’t realize that you need to stop due to an uncontrollable urge to constantly monitor market movements and stay up-to-date on cryptocurrency news to execute trades.

It is essential to note that cryptocurrency by itself is not addictive, but when our brain is involved, everything can change. As you can always view your portfolio holdings in real-time and access the intriguing content that is regularly provided on websites like YouTube and it may make you addicted.

You are addicted if you spend a lot of time researching or trading cryptocurrency or monitoring charts. Also, ineffective attempts to halt trading and increase your risk without any real strategy show the signs of severe crypto addiction. Furthermore, a loss of interest in social interactions and other pursuits, experiencing stress, depression, mood swings, insomnia and poor mental health are all symptoms of being too dependent on crypto in your day-to-day life. So, what are the various ways to get rid of stress and depression in cryptocurrency?

To end your crypto addiction and the associated stress and depression, delete the crypto-related apps and distance yourself from any news targeting digital currencies. Alternatively, limit the amount of money you put into crypto investments and do not consider it your primary income source. Instead, look for other ways of making money in the crypto space.

All you need is to build skills related to the career of your choice. For instance, if you are interested in the Metaverse field, you need to gain knowledge of the technologies (such as artificial intelligence, the Internet of Things, virtual reality, augmented reality, etc.) that are used to build immersive worlds.

Moreover, you can take a trip to your favorite holiday destination, create some events with pals who aren’t interested in cryptocurrencies or join a new social group to recharge yourself. Instead of keeping your problems and concerns to yourself, talk to other people about them. Sometimes sharing your issues with someone you trust helps you to heal.

How do crypto losses affect mental well-being?

For some cryptocurrency traders, the exhilarating highs and crushing lows can fuel addiction and mental health issues like sadness or anxiety. Even with an understanding of cryptocurrency investments, inexperienced crypto investors are susceptible to emotional pressure from crypto losses. As a result, one is more likely to develop a loss aversion as they suffer losses more frequently. Loss aversion states that the disutility of losing a good is greater than the utility of getting it.

Furthermore, the consequences of significant crypto losses might be more upsetting than generalizations about the effects of little gains or losses might imply. For example, compared to slight losses, which can be made up for by short-term changes in consumption patterns or an increase in work hours, wealth losses could only be made up for over years with positive crypto market returns.

So, when substantial wealth losses remain unrecovered for a long time, it starts impacting the victim’s mental health. For instance, one of the top 10 most valued cryptocurrencies, Terra (LUNA) —now called Terra Classic (LUNC) — saw its price drop by more than 98% in a single day, causing anguish among crypto investors since they may have lost a significant amount of money without realizing the risk they were taking. With time, fears and failures in cryptocurrency investments caused by such heavy losses lead to stress and depression among sufferers.

How do you control emotions in crypto?

Basing one’s decisions on emotions causes your current state of mind to make decisions that are contrary to logic. That said, trading and purchasing cryptocurrencies may be enjoyable and lucrative because that’s how your brain processes them.

Cryptocurrency investments can also be blamed for FOMO and FUD, which raises the possibility of making irrational choices. Therefore, controlling your emotions when investing in cryptocurrencies is essential to reducing risk and preventing the loss of money.

The most important step in refusing to allow your emotions to impact you is asking yourself how buying cryptocurrency fits into your overall financial plan. Are you aware of the volatility of cryptocurrency markets and the risks involved in digital currency investments? If you do not know the answers to these questions, you may lose money.

Furthermore, learning as much as possible about the cryptocurrencies you might purchase, and the technology that powers them is crucial. Also, read the project’s white paper carefully, especially the section on tokenomics, and seek out initiatives with vibrant communities. Even though they do not guarantee success, these things will help you to understand the projects you are investing in and understand the dark aspects of cryptocurrency.

Finding a platform or exchange to help you achieve your goals based on your plan is how you can avoid emotional decisions. In addition, you must be aware of your spending limit and adhere to it; only invest what you can afford to lose because investing in cryptocurrency entails high risk. Once you’ve decided on a limit, abide by it. Don’t increase your spending on a whim or out of FOMO.

Another practical protective step that you can take is to set a limit order. For example, if crypto values fall sharply, limit orders might shield you from losses or aid in securing gains. With a limit order, you can choose the lowest price at which you’ll sell off your digital currency.