Psychology of Bitcoin Investing: The Mind of a Crypto Investor

Psychology of Bitcoin Investing: The Mind of a Crypto Investor

Gianluca Lombardi February 22, 2023
8 min read

Bitcoin investing is packed with thrills and potential profits, but it also comes with an emotional rollercoaster of fear of missing out (FOMO) and fear, uncertainty, and doubt (FUD).

But what exactly are these psychological hurdles, and how can you leap over them to become a crypto conquistador?

This article dives headfirst into the world of fear, uncertainty, and doubt, unearthing cognitive biases, tackling volatility, and confronting addiction – all in the name of mastering the emotional and psychological aspects of investing in Bitcoin.

Ready to sharpen your mental game and conquer the crypto kingdom? Head on over to our Bitcoin Investing hub page for more expert insights and strategies!


The rise of Bitcoin as a digital currency has brought about a new era of investment opportunities. In recent years, many individuals have turned to Bitcoin as a way to potentially make a profit, with some even investing their life savings.

However, investing in Bitcoin can be a highly emotional and psychological experience, with investors often experiencing fear, uncertainty, and doubt (FUD), cognitive biases, and addiction. The volatility of the market can also have a significant impact on an individual’s emotions. The purpose of this article is to explore the psychological and emotional aspects of investing in Bitcoin and to provide coping strategies for managing the impact on investors.

FOMO – fear of missing out: a common emotional obstacle

Illustration abbreviation letters FOMO

Fear of missing out (FOMO) is a common psychological phenomenon that can affect investors in the Bitcoin market.

I felt it many times.

FOMO refers to the fear of missing out on potential gains or opportunities, and it can drive individuals to make impulsive and irrational investment decisions.

For example, an individual may feel pressure to invest in Bitcoin because they see others making a profit, even if it is not in line with their investment goals or risk tolerance.

FOMO can be particularly powerful in the context of Bitcoin, as the market is highly volatile and there are often rapid fluctuations in value. The potential for large gains can be tempting, and the fear of missing out on a profitable opportunity can lead individuals to invest more than they can afford to lose. This can lead to financial stress, anxiety and in some cases even depression.

Additionally, FOMO can cause investors to hold on to losing investments for too long, which can further compound the losses.

FUD – fear, uncertainty, doubt – another psychological challenge

Illustration abbreviation-letters FUD

Fear, uncertainty, and doubt (FUD) also have a significant psychological impact on investors in Bitcoin.

FUD refers to the spread of negative or misleading information that can create a sense of fear and uncertainty in the market.

That feeling, when we read the news and we want to sell before even having a thought about that. It’s cruel!

This leads investors into making impulsive decisions based on emotions rather than rational analysis.

FUD is being spread through various channels, including social media, news outlets, and even through word of mouth. It is sometimes spread deliberately by individuals or groups with vested interests in manipulating the market.

The uncertainty and negative sentiment created by FUD can discourage potential investors from entering the market and can cause current investors to lose confidence in their investments.

Furthermore, FUD can amplify market volatility, making it even harder for investors to make rational decisions. To avoid FUD, it is important to conduct thorough research, get information from reputable sources and be able to differentiate between speculation and facts.

The role of cognitive biases in decision-making

Cognitive biases are a natural part of human decision-making and can have a significant impact on an individual’s investment decisions in the Bitcoin market.

These biases refer to systematic patterns of deviation from rational decision-making and can lead to irrational choices. For example, the confirmation bias can cause investors to seek out information that confirms their existing beliefs and ignore information that contradicts them, which then leads to poor investment decisions.

Another example is the sunk cost fallacy, which occurs when an investor continues to invest in an asset because they have already invested a significant amount of money, even if the investment is no longer profitable.

This bias causes investors to hold onto losing investments for too long, resulting in significant financial losses. The availability heuristic is another cognitive bias that can lead individuals to overestimate the likelihood of an event based on the ease with which examples come to mind. This can be dangerous in the context of Bitcoin investment, as it can lead to overconfidence or complacency in the face of market volatility.

To overcome these biases, it is important to be aware of them and to make an effort to consider multiple perspectives and to evaluate investment decisions objectively. Seeking advice from a professional financial advisor or doing further research can also help.

The role of addiction and gambling behavior

Investing in Bitcoin can also have an impact on an individual’s addictive and gambling behavior. The volatility of the market and the potential for large gains create a sense of excitement and thrill, which turns to be addictive for some individuals.

This eventually leads to excessive trading and a lack of self-control, resulting in financial losses. Additionally, the anonymity and ease of access of online Bitcoin exchanges can make it easy for individuals with gambling addiction to access the market and engage in excessive investment behavior.

Furthermore, addiction and gambling behavior can lead to an individual’s inability to make rational and well-informed decisions, and can cause them to invest more than they can afford to lose. This can lead to financial stress and can impact an individual’s overall well-being. It is important for individuals to be aware of their own behavior and to seek help if they feel that their investment behavior is becoming problematic.

Setting clear investment goals and developing a plan for managing emotions and financial resources can help to mitigate the impact of addiction and gambling behavior when investing in Bitcoin.

Tips on how to handle the emotional challenges when investing in Bitcoin

Now that we have discussed the emotional and psychological challenges that come with investing in Bitcoin such as FOMO, FUD, cognitive biases, volatility, and addiction, it’s important to review strategies for coping with these challenges.

In the next paragraph, you will find tips and techniques out of our experience for managing these challenges and help you to make well-informed investment decisions while protecting your emotional and psychological well-being.

  1. Set clear investment goals: Before investing in Bitcoin, it’s important to have a clear understanding of what you hope to achieve with your investment. Setting specific, measurable, and achievable goals can help to focus your investment decisions and reduce the impact of FOMO and FUD.
  2. Diversify investments: Diversifying your investments can help to spread risk and reduce the impact of volatility on your overall portfolio. By investing in a variety of assets, you can mitigate the impact of losses in one area of your portfolio.
  3. Manage emotions through mindfulness and self-reflection: Mindfulness and self-reflection can help you to manage your emotions and stay focused on your investment goals. Taking time to reflect on your thoughts and feelings can help you to identify and overcome any cognitive biases that may be impacting your investment decisions.
  4. Seek professional help: If you feel that your emotional and psychological well-being is being negatively impacted by your investment in Bitcoin, it may be helpful to seek professional help. A financial advisor or therapist can provide guidance and support to help you manage your emotions and make well-informed investment decisions.
  5. Keep the long-term perspective: Short-term market fluctuations are normal, but it is important to maintain a long-term perspective. Keep in mind that investing in Bitcoin is a long-term investment and that the market is highly volatile, it is important not to be swayed by short-term market fluctuations.
  6. Take breaks: It is important to take breaks from constantly monitoring market movements, this can help you to avoid becoming too emotionally invested in the market and can help to prevent decision-making that is driven by emotions.

Where to invest in Bitcoin?

Now that we have discussed the various emotional challenges that come with investing in bitcoin and tips on how to handle them, it’s important to consider how to get started with investing in bitcoin.

There are several ways to invest in bitcoin, each with their own advantages and disadvantages.

The options these days are a lot really. These include cryptocurrency exchanges, bitcoin ATMs, peer-to-peer platforms, Bitcoin Investment Trusts, Bitcoin CFD with a licensed trading platform.

It’s crucial to research and compare the different options available and to choose the one that best fits your investment goals, risk tolerance, and experience level. Furthermore, it’s important to keep in mind that investing in bitcoin is a high-risk investment and should be approached with caution. It is important to conduct thorough research, understand the risks and to diversify your investments to mitigate the risk.

Investing in Bitcoin directly with a cryptocurrency exchange

Diving into the world of Bitcoin investing typically starts with buying the digital currency through a cryptocurrency exchange or a peer-to-peer platform. This popular approach lets you hold the actual Bitcoin, but it also means you’ve got to step up your security game.

With great crypto power comes great responsibility – it’s essential to learn the ropes of storing your Bitcoin securely on your own. Ready to take the plunge and explore the top exchanges for your Bitcoin journey? Check out our in-depth reviews of Binance and Bybit to kickstart your investment adventure!

Investing in Bitcoin CFD through a licensed broker

CFD, short for Contract for Difference, is a derivative product that empowers investors to make bets on the price fluctuations of an underlying asset, like Bitcoin, without actually owning it.

This investment style is ideal for those who prefer to ride the Bitcoin price wave without diving into the nitty-gritty of secure storage.

Just remember, choosing a reputable broker licensed and regulated by a trustworthy financial authority is crucial for your peace of mind. Ready to explore the world of online brokers? Check out our detailed reviews of eToro and Libertex to find the right fit for your crypto CFD adventure!


In conclusion, investing in Bitcoin can have a significant impact on an individual’s psychological and emotional well-being.

By understanding the impact of fear, uncertainty, and doubt, cognitive biases, volatility, and addiction on investors, as well as implementing strategies for managing the emotional and psychological aspects of investing in Bitcoin such as setting clear investment goals, diversifying investments, managing emotions through mindfulness and self-reflection, seeking professional help if needed and keeping a long-term perspective, you can better cope with the emotional challenges of investing in Bitcoin and make well-informed investment decisions. It’s important to keep in mind that Bitcoin is a high-risk investment and should be approached with caution.

More Investing Tips and Resources:

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bitcoin vs gold illustration

Gianluca Lombardi

Gianluca is the editor-in-chief of this site. A finance graduate, he is an active trader who has tested all trading platforms and knows all their secrets. Technology is his passion; he spends much of his free time in the metaverse. Gianluca loves learning new things, researching, discussing and writing about technology, especially when it comes to cryptocurrency and blockchain technology.