The mental game leak poker players have with Bitcoin
Jared Tendler is concerned that poker players are putting too much of their bankrolls into Cryptocurrency without understanding it.
The rise of Cryptocurrency in the poker world has been particularly interesting to me because most of my clients these days are poker players or professional traders. The mental game issues poker players and traders face are incredibly similar, which is why The Mental Game of Poker has actually enjoyed a bit of a cult following in the trading world.
Clearly Bitcoin is going to be big in poker and the world at large, I even accept it as a payment method for my books and coaching services. While the advice I give to traders almost certainly applies to Crypto investors, I wanted to take some time out to bring up a mental game concern I have for poker players caught by the Crypto bug.
The Dunning-Krueger effect
Because professional poker players have a serious amount of skill and are good at dealing with uncertainty, I fear that many of them are overestimating the skill they have as Crypto investors. If you are just having a bit of a fun gamble with Bitcoin, because you think it is the future of currency, and you can stand losing a majority if not all of your investment, feel free to stop reading now. However, if you have a significant portion of your bankroll or net worth invested in it, which would hurt you if you lost it, please at least consider these two patterns I often see in poker players:
- It’s easy to assume their skill in poker automatically makes them good in other forms of “gambling”, like sports betting, daily fantasy sports, or trading and investing.
- It’s hard for good players to admit their bad at something that requires the same types of skills as poker, which sports betting, DFS, and trading and investing do.
The similarities between poker and these areas make a poker player more likely to be successful than the general public, but there is still a significant learning curve to become skilled. What would you think of a trader or sports better who thought it would be easy to make money in a $5/$10 cash game? You’d think they were a fish.
So when it comes to investing in Cryptos, ask yourself how much do you really understand about this rapidly growing industry? Or about trading?
I fear some poker players have a cognitive bias called the Dunning-Krueger Effect, whereby those who are so unskilled in something, they can’t spot their weaknesses, and falsely assume they’re actually good at it. Think back to when you first started playing poker, you were the fish, but when you won assumed it was because you knew what you were doing. Looking back on it now, it’s obvious how bad you were. How similar is your early Crypto investing?
Would a crash be another Black Friday?
I’m not here to shit on Bitcoin. I am excited by it. But I see a lot of players who appear to have a lot tied up in Cryptocurrencies who don’t seem to have done much due diligence. Or understand the unique complexities of trading and investing. Their decisions seem motivated more by a ‘fear of missing out’ and potential of losing out on large sums of money.
I remember how devastating Black Friday was for the poker community, in part because many players kept way too much money in their poker accounts. I fear that if Bitcoin crashed, the shock would ripple through the poker community and cause a lot of pain.
Many poker players have the potential to be good investors or active traders, but trading is far more complex than poker (at least in the sense that it is not confined to a set of in-game rules). Don’t just passively sit there while it feels like you are ‘printing money’, keep expanding your understanding of the investing, trading and technology side of Crypto. Respect the skills needed to actually be good at it, your poker skills don’t automatically transfer.
Do you think the poker community is mentally unprepared to become Bitcoin investors? Let us know in the comments:
More from Jared Tendler
- The Mental Game of Spin & Go
- The Mental Game of Vlogging
- When it helps to tell bad beat stories
- Mindset webinar
