This last week and within 24 hours, the Securities and Exchange Commission made two allegations against the cryptocurrency platforms Binance and Coinbase, asserting the latter was engaged in illicit securities trading within the United States.

These moves mark a significant escalation in the SEC’s efforts to regulate an industry that has long existed in a regulatory gray area.

As a consequence of these allegations, Coinbase’s stock tumbled more than 12% on June 6, while Binance saw investors withdraw nearly $800 million from its platform within the same timeframe.

SEE MORE: Someone paid you in crypto. Do you have to pay the tax man?

These legal actions have set the stage for potentially lengthy litigation processes that may take months or even years to resolve. Consequently, numerous American investors who have faith in digital assets find themselves in a state of uncertainty.

The key question remains: Is there a secure place to trade crypto?

The straightforward answer, at least for the time being, is likely no.

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According to Bloomberg columnist Matt Levine, it is a reasonable assumption that “all cryptocurrency exchanges are doing crimes, and if you’re fortunate, your exchange is committing only procedural offenses.”

Even as such volatility and uncertainty around crypto continue, many are still consumed with and committed to investing in crypto. Why?

A lot of money has been made in cryptocurrency – and a lot lost. In a world that has recently faced and continues to face great challenges, the excitement of potential big wins takes on even more importance.

SEE MORE: Cryptocurrency beginners: Be wary of asset risks

Before I proceed further, here is my disclaimer: I am not a wealth adviser nor an investment professional of any kind. Therefore, I am not proffering an opinion on whether it is good or not to invest in cryptocurrency. I am a behaviorist and a facilitator of adult development. It is with my lens that I share some reasons for which, even though the odds are chancy, significant numbers of people are riding high-risk investments such as “crypto waves.”

Excitement and hope

We are emerging from a devastating period of COVID and overlapping this, the longest Bear market since 1948. People are hungry for the positive and that which potentially promises to change their future.

Living generations are challenged, as many baby boomers are not financially set for retirement at age 65 or even 70, and the younger generations are saddled with student loans and other debt and have much less chance to own their own homes. Because of these factors and other challenging dynamics, people are hungry for solutions.

In many cases, they are more prone to make emotionally-based decisions, instead of using logic and sound guidance.

We are socially influenced

Herd mentality, commonly referred to as mob mentality or crowd mentality, is a psychological phenomenon that exerts a profound influence on human behavior. It manifests when individuals within a group adopt the beliefs, behaviors, or attitudes of the majority, sometimes at the cost of their own critical thinking or individuality.

This phenomenon is observable in numerous facets of everyday life, encompassing fashion trends, political affiliations, and investment choices.

Social media plays into this well and amplifies the influence on what seems popular, and investing in crypto is included. FOMO (fear of missing out) sets in, once again, investment decisions based on less-than-optimal criteria are made.

We need to belong

Crypto can become an important part of defining someone’s identity. Humans hunger for a strong sense of acceptance and belonging. Cultures and subcultures are based on this.

Bitcoin is more religion than a solution to any problem, billionaire Mark Cuban once told Forbes.

In fact, bitcoin aficionados have their own jargon full of acronyms and phrases that have become the foundation for the crypto subculture language.

According to Breton, even though bitcoin is attracting greater interest from serious investors and mainstream financial institutions, it remains a relatively new and seemingly subversive concept. As a result, individuals who choose to invest in bitcoin may perceive themselves as being part of a radical movement or engaging in countercultural behavior.

Is this article meant to be a criticism of cryptocurrency? Absolutely not. It’s simply an exposé as to what can influence many people to invest in such high-risk, volatile opportunities.

In fact, during the height of the pandemic, I invested a modest amount of money in crypto. Two of my sons were excited about it and after studying it, we agreed it might be fun to see what might happen.

So we each decided on an amount of money that we were comfortable losing since it was considered high risk. Today, that amount is worth a lot less. Could it be worth more someday? Perhaps. But I’m not betting my retirement on it.

Patti Cotton serves as a thought partner to CEOs and their teams to help manage complexity and change. Reach her at [email protected].

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