As global regulatory measures shape the development of the crypto sector, digital assets are emerging as an alternative to traditional investment tools. Despite reaching an all-time high of over $3 trillion (about 2,51,89,440 crore rupees), crypto assets remain volatile, relatively new and largely unregulated. One uninformed decision or unexpected event in crypto investing can lead to significant financial losses and serious mental stress. This raises an important question: What can investors do to protect themselves from such situations?

World Mental Health Day, celebrated annually on October 10, was established in 1992 by the World Federation for Mental Health (WFMH) to raise global awareness of the importance of mental well-being for all.

In this article, we will examine the financial pressures faced by Indian investors, especially during bear markets and amid uncertainty in the crypto sector. We will also explore decision-making strategies that can help investors avoid financial stress in such challenging times.

State of stress among crypto investors

In 2023, a PwC report revealed that 74 percent of the Indian population feels under pressure while managing personal finances and living expenses. Additionally, 63 percent of Indians reported actively reducing their spending on non-essential or luxury items since last year.

The potential for overnight gains from market fluctuations often entices investors to get involved in crypto assets. However, lack of proper investment knowledge can lead to significant losses of hard-earned money.

Speaking to Gadgets360, Edul Patel, CEO of crypto investment platform Mudrex, noted that unlike traditional investment platforms, the crypto trading market operates 24/7. This constant availability can cause investors to feel anxious, causing them to frequently check the status of their assets. Even minor fluctuations in the market can cause momentary stress.

“Getting involved in the crypto market can feel overwhelming, especially during periods of high volatility,” Patel said. “It’s easy to get caught up in the emotions of market changes, but what’s key is to keep your focus on your long-term goals.”

In July, a hacking incident drained more than $230 million (roughly Rs. 1,900 crore) from the wallets of Indian crypto exchange WazirX. In response, WazirX suspended trading and payout services, causing consternation among its user community. In the weeks following the attack, many users took to social media to express their concern about the situation, with some even threatening to commit suicide for fear of losing their investments. The situation escalated when WazirX advised individuals experiencing suicidal thoughts to contact the national emergency line.

User testimonials revealed piles of unpaid bills as many individuals invested their savings in crypto trading hoping for a quick recovery.

The incident provided a clear illustration of how financial setbacks can lead to significant mental difficulties, forcing some individuals to consider drastic and catastrophic decisions.

A guide for investors

Cryptoanalysts consistently advise investors not to rely solely on cryptocurrencies for their investments and savings. Instead, cryptocurrencies should be viewed as tools for diversifying investment portfolios.

“Diversifying investments can help mitigate risk, while disciplined strategies like HODLing can keep investors grounded during turbulence. Staying informed and making decisions based on research rather than emotion will also help manage uncertainty,” Patel said.

Before experimenting with larger investments, investors should first understand market dynamics through smaller investments. Only after becoming familiar with the gradual operation of crypto platforms and market sentiments should they consider allocating larger amounts to relatively stable assets.

Experts from the Indian crypto trading department unanimously agree that market volatility is temporary; maintaining a long-term vision is key to achieving financial growth in crypto portfolios. There’s no need to rush into buying or selling assets in the 24-hour market—a practice that, if left unchecked, can lead to anxiety and stress.

Speaking to Gadgets360, Hashtag Web3 founder Vedang Vatsa said, “Given the high volatility of the crypto market, the fundamental principle to remember is to only invest what you can afford to lose.” According to Vatsa, which manages global social communities for Web3 professionals, this risk-calculated approach could play a key role in reducing financial stress for the investor community.

Investors should mentally prepare themselves for potential liquidations at some point, as the crypto market is subject to the effects of a variety of factors, from geopolitical tensions to macroeconomic trends and political decisions. Every significant and minor change can affect the market.

“Fundamental risks are so high that any level of unhedged leverage will always result in financial losses. If one wants to earn consistently, one must look at the implied volatility curve and take long positions, with minimal leverage,” said Ganesh Mahidhar from the investment team at Further Ventures. to new investors via Gadgets360.

Moreover, crypto investors are strongly encouraged to engage exclusively with select FIU compliant platforms in India for their investments as this practice provides a better remedy. Implementing two-factor authentication and regularly updating passwords are key steps to increase security. In addition, using offline cold wallets instead of web-connected hot wallets can help protect against hacking attempts and potential losses.