Crypto Reddit Psychology: Have You SEEN This Study?!

Crypto Reddit Psychology: Have You SEEN This Study?!

One of the first things you learn in cryptocurrency is to take anything you read on social media about the crypto market or your favorite coins and tokens with a big pinch of salt. Naturally, there’s no shortage of such things when the crypto market is crashing or when bad news comes out about a specific project, and they often add fuel to the fire. A team of researchers recently decided to find out exactly what these posts do to the mental health of crypto holders, and today I’m going to discuss what they found and how it’s affecting the crypto market. Let’s see what effects social media posts about crypto are having on the mind.

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About The Report

The research paper I’ll be summarizing today is about crypto-related activity on Reddit. For those unfamiliar, Reddit is one of the most popular social media platforms in the world, with over 500 million monthly active users.

Reddit itself consists of a series of dedicated discussion boards known as subreddits, and the cryptocurrency subreddit boasts over 5 million users who share their thoughts about the crypto market and crypto projects in real time.

Like many social media platforms, Reddit has played a role in shaping the real world through the collective actions of its users. The most famous example of this is arguably the coordinated short squeeze of hedge funds by the Wall Street bets subreddit in 2021. The cryptocurrency subreddit has also seen no shortage of such campaigns. Though many of these have involved pumping and dumping of coins, some of them have been more serious, such as the coordinated withdrawal of Monero’s XMR from exchanges in April this year.

Crypto Reddit Psychology image

Now the main takeaway is that subreddits and their posts have the power to move markets, and Reddit’s influence on the crypto market is likely to increase as the social media platform itself embraces crypto through things like tokenized community points and NFTs. This is why the research paper I’ll be summarizing today is so important. It’s titled “A thematic analysis of mental health addiction and gambling discussion on Reddit during the recent cryptocurrency market downturn” and I already feel personally targeted.

This paper is still in preprint, meaning it hasn’t been peer reviewed by an academic journal. This means there’s a small chance that what the authors found could be null and void because they didn’t crunch the numbers correctly, but it seems from here like they did a damn good job. For anyone wondering, the paper was penned by researchers from the University of Queensland and the National Center for Youth Substance Use, both of which are based in Australia. Based on the declaration section at the end of the paper, none of the authors hold any cryptocurrency. With that context out of the way, let’s see what this research paper says about us copy trading crypto holders.


The paper begins with a brief introduction wherein the authors point out that the crypto market has grown exponentially over the last two years, hitting a market cap of over $2 trillion in April of last year. I’ll quickly note that it’s a bit odd that the authors chose this specific price and period since the crypto market hit nearly $3 trillion in November last year.

In any case, the authors go on to say that crypto’s meteoric rise attracted millions of retail investors who are put at risk because crypto’s meteoric rise attracted millions of retail investors who are put at risk because crypto’s meteoric rise attracted millions of retail investors who aren’t sufficiently regulated. I don’t like how this is going.

To add insult to injury, the authors imply that decentralized finance is somehow analogous to gambling. Now don’t get me wrong, there’s no shortage of degeneracy in DeFi, but it’s wrong to tar such an important crypto niche with such a broad brush given these alleged issues. The authors conclude that the potential for harm and economic loss of cryptocurrency trading and investment justifies further investigation into its relationship with mental health and add that there isn’t much research about the subject.

The authors then reveal that they focused their research on the cryptocurrency market’s 22% drop in January of this year and how users on the cryptocurrency subreddit reacted to it. This is a little unfortunate because if they’d waited until May, they’d have had much better data about how the crypto community handles crashes given Terra’s implosion. The authors then reveal that the cryptocurrency subreddit is the largest English cryptocurrency forum, which is news to me but not all that surprising.


The authors also specify that they’ll be taking a qualitative rather than quantitative approach, which makes sense. For reference, qualitative involves looking more at the contents and categories rather than the raw numbers to draw conclusions.

The second part of the paper is the methodology, aka how the authors analyze the content of the cryptocurrency subreddit during the crypto market drawdown in January. The authors start by saying that they analyzed a whopping 1,315 threads on the cryptocurrency subreddit between the 3rd of January and the 4th of February. During this one-month window, the crypto market dropped by nearly 25%, which is standard as far as crypto volatility goes.

What’s interesting is that the authors note that this study received an ethics exemption from the University of Queensland as it did not include human participants and used publicly available data. Now, call me crazy, but this doesn’t sound quite right. I mean, yes, there were no human participants, but you’d think that the people posting on reddit would count as humans, and it’s not just me either. Many of the reactions by users of the cryptocurrency subreddit to this study ask whether they’re being used as lab rats, and even joke about posting nonsense to mess up future studies.

In any case, the authors then explain that they filtered the 1,315 threads. They collected data using keywords related to mental health and gambling. This left them with 225 threads, which they reduced to 194 after removing duplicate threads and any threads without replies, and reduced the number further to 130 after removing any threads related to market analysis, news stories, or technical support. I don’t know who needs to hear it, but never ever go to Reddit for technical support. Mark my words, you will lose your crypto or worse. 

Then, having identified the relevant threads, the next order of business was to analyze their contents, and, by the sand of it, one of the authors was tasked with reading through every single thread and comment manually. That sounds like someone from our research team. What’s more is that the author tasked with reviewing these Reddit threads had to familiarize themselves with the data set, meaning they read through these threads and all their comments multiple times to get that psychology credit for their degree.

In all seriousness, the authors managed to identify common themes across all the threads and their comments. Three themes emerged, which were then subdivided into sub-themes.

The first theme was emotional state and mental health, which was subdivided into negative sentiment, positive sentiment, and an absence of emotion. What’s funny is that the recurring themes within these sub-themes were crypto investors’ being happy about buying the dip while simultaneously being sad that they didn’t have more money to buy the dip. Something else was also pointed out in the subsequent reaction to the paper on the cryptocurrency subreddit.

The second theme was strategies for coping, which was subdivided into reducing stress related to the current state of the crypto market and combating the urge to trade, presumably the urge to buy the dip. I was happy to see exercise as one of the recurring themes within these sub-themes. It’s one of the many ways you can significantly reduce crypto-related stress.

The third theme was likeness to gambling, which was subdivided into fixation or addiction and risk perceptions of cryptocurrency. What’s hilarious is that one of the recurring themes within these sub-themes was that “life in general is a gamble,” which is kind of true if you think about it.

Another two recurring themes that stuck out to me were that crypto trading is gambling if you’re using leverage and that crypto investing is gambling if you’re not doing your research. This is also very true.


The authors then take some time to showcase the results, including some of the threads and comments on the cryptocurrency subreddit that fell into the three categories of emotional state, mental health strategies for coping, and likeness to gambling. The authors note that more than half of the 130 threads they analyzed were about emotional state and mental health, and here are a few of the gems they found. Apologies in advance if you were one of the folks who posted these comments.

‘I’m almost down to 100k, close to 2x my yearly salary from a peak of 150k. I’m not gonna sell now. I hate myself for not selling at the peak, but now it’s too late.’ – this sounds like my first time in crypto .

On a more positive note,

‘While people are screaming and crying, I’m smiling and buying. I feel like a kid in a candy store with all these discounts and can’t decide what to buy.’

Speaking of feelings, the authors were surprised to find that the most common emotion associated with the crypto market crash was apathy, at 44%. In other words, nearly half of the crypto holders and traders on the cryptocurrency subreddit were cool with the crash. For example,

‘Ever since last May, when I experienced shock, I don’t think a single dip has caused me to truly panic.’

I’m sure this anonymous didn’t realize another bloody may was on the way, but I’m sure he or she handled it well. After all,

‘When you become emotionless about losing money, you’re halfway to getting rich.’

I didn’t know Warren Buffett was on the cryptocurrency subreddit. I hope you’re enjoying it, sir. Another great comment was:

‘I honestly couldn’t care about this dip because I’m bullish on crypto for the long term and it was never my intention to cash out in the short term.’

 That reminds me of an important statistic, and that’s that more than 50% of first-time crypto investors become hodlers. This was discovered by the Bank for international settlements, which is one of the most anti-crypto institutions out there.

Anyhow, when it comes to the coping strategies employed by crypto holders, the threads and comments are basically what you would expect. Spend more time outdoors, doing other things besides crypto, and remember to take profits.

One comment that stuck out to me was:

“Advising people to sell in red. I see if you’re thinking of selling in red, then you deserve all that emotional distress.”

 Someone call the police because there’s been a murder, not literally, of course. In another comment that caught my eye was:

‘I try to follow this advice myself. When I’m craving a rush, I’ll try to do at least 30 minutes of cardio before making a trade. While it’s not a dopamine hit, the endorphins help me clear my mind and reflect on whether I’m making a good decision or not.’

Now this actually ties into the video about crypto stress that I mentioned a few moments ago. If you’re tired or hungry, you’re more likely to act irrationally. I reckon the same principle applies when you’re feeling restless. Believe me, exercise does wonders for the brain.

In terms of the likeness to the gambling theme, the authors found that there’s lots of disagreement on the cryptocurrency subreddit about whether crypto investing is analogous to gambling. The authors discovered that cryptocurrency investing is analogous to gambling. The authors found that there’s on the cryptocurrency subreddit. Some argue that all crypto investing is gambling except of bitcoin copy trading, as exemplified by this comment:

‘It’s all a gamble. Every single crypto investment is a gamble. It doesn’t matter if it’s coins or altcoins or bitcoin or whatever, it is still a gamble. Even with research, anything can happen.’

Others argue that crypto isn’t gambling at all, as exemplified by this opposing comment:

‘Anyone who says crypto is a gamble should read a book on finance and maybe take some online economic classes because in no way can it be compared to betting or a casino.’

I reckon the truth is somewhere in the middle, as it really does depend on which crypto project we’re talking about. There’s no question that coins aren’t that different from poker chips.


The third part of the paper discusses the findings from the second part of the paper. Here the authors address the elements in the room. The reason being that the crypto market has continued to crash since January and took multiple arrows to the knee in May and June in more ways than one.

The authors note that obsessively checking one’s crypto portfolio during pumps and dumps seems to be the most popular pastime of crypto holders on reddit. Guilty as charged. ‘Our findings indicate that long-term conviction might protect against mental distress caused by fluctuating cryptocurrency prices’, and I reckon the authors are on to something there. I mean, it would be crazy if all this crypto adoption was just because investors couldn’t fathom selling at such a massive loss and ended up holding instead as a result, only to find that that was the better option after all and only because the only people left were holders.

There seems to be a bit of an echo chamber in this regard, as the authors found that ‘posts recommending profit taking were met with occasional hostility’ and I reckon that’s a bit of an understatement. In addition, ‘descriptions of apathy and indifference indicate that prolonged exposure may desensitize participants to the dramatic fluctuations of the market’. The authors note that this desensitization likely makes it possible for crypto investors to make more rational decisions, but they caution that this desensitization could have negative effects elsewhere in one’s life. I find that hard to believe, as acting rationally is probably best in almost every situation.

The authors are also suspicious about the absence of advocacy for leverage on the cryptocurrency subreddit and assume that this is simply because the crypto market is in a downturn. This makes sense to me. The authors also take issue with the absence of any criteria for what counts as problematic cryptocurrency trading behavior. They leave it up to the psychologists to diagnose everything. To be fair, a clarification of crypto definitions is desperately needed.

The authors conclude that the cryptocurrency subreddit could be the ideal place for crypto holders to go when the crypto market is messing with their minds, and I definitely agree, but I must stress that you should proceed with caution, especially when the crypto market is rallying now.

The fourth and fifth parts of the research paper are about the limitations of the study and the author’s conclusion. As far as limitations go, the authors lament the fact that they were only able to gather data for a single month, especially given the fact that the crypto market continued to crash. They weren’t too happy about throwing out 90% of the threads they had initially gathered because they weren’t directly related to mental health. They argue this is a justification for a dedicated subreddit for crypto holders experiencing distress, but I reckon you want as much engagement as possible with these kinds of posts. You’re more likely to get that engagement on a larger subreddit.

In the conclusion, the authors just reiterate everything they mentioned earlier, namely that the cryptocurrency subreddit serves as a good support network and that the criteria for what counts as problematic crypto trading and investing need to be defined.

What Does It Mean For Crypto?

So this brings me to the big question, and that’s what the findings of this paper mean for the crypto market. Well, I’ll start by saying that the paper is admittedly limited in its scope, covering just one month when the crypto market crashed by a fairly standard percentage, which is not very representative of just how crazy the crypto community on reddit can get. I know this because I check the cryptocurrency subreddit almost every day and when blood is truly in the streets or when the crypto market is greedily green, the sort of stuff you’re likely to come across often amplifies the mainstream sentiment.

The main takeaway from this paper for me is that the crypto community on Reddit is a bit of an echo chamber, just like most other communities on social media. This is something of a double-edged sword. On the one hand, you have crypto holders and traders telling each other to zoom out when in doubt and even double down on investments even when the crypto market is in the red, which is ultimately good for the crypto market since it means less selling. On the other hand, there are crypto holders and traders who should be selling because they are seriously short on cash, but they feel pressured or even threatened to clutch their bags lest they be kicked out of the crypto community.

I bet most crypto holders and traders that are a part of the cryptocurrency subreddit rarely post and instead choose to lurk like me. The authors note that this makes it hard to measure what the crypto community at large is actually thinking and doing, something that was also noted by the authors.

In sum, it’s clear that a lot more research is needed about how crypto holders and traders cope with the vagaries of the market. Let’s just hope that this future research isn’t done solely to justify a crypto crackdown due to the risks associated with this new asset class. That would be something straight out of the FATF’s playbook.

[This article is a transcription of a video made by Coin Bureau]

[Original video:]