We Asked a Neuroscientist How Bitcoin's Highs and Lows Affect the Brain
The price of a bitcoin is a fickle thing. Two years ago, Bitcoin reached its highest price ever: $1,242 for a single coin in US dollars, up from $12 at the beginning of 2013. Almost immediately after that peak, the price began to sink, and today the virtual currency still hasn’t regained its former glory. The price of a bitcoin simply continues to bob up and down, from around $200 to just above $400 this year alone.
Researchers have done plenty of work analyzing the effects of changes in the stock market on the human brain, and vice-versa. The stock market’s behaviour is ultimately the result of the collective decision-making of many people, after all (less so today now that high-frequency trading algorithms are popular), and decisions are physiological things; they happen in the brain. And just like the price of a stock, Bitcoin price is largely a function of the decisions people make.
“It’s all in the brain, and looking at specific regions that we know are carrying information about risk and reward is kind of like eavesdropping,” said Dr. Gregory Berns, a neuroeconomist and director of the Center for Neuropolicy at Emory University. Dr. Berns is also a faculty member in the NS program.
According to Berns, information and expectation are the key things to consider when teasing out how firing neurons direct the market. Information guides your expectations, and depending on what your expectation is—whether Bitcoin is about to skyrocket or crash, say—a region in the brain called the striatum will react differently. The striatum is closely associated with decision-making, and has the densest collection of dopamine receptors in the brain, Berns said.