A bag holder definition is an investor who never sells any of their holdings, regardless of the asset’s value or market conditions. This title is not for those who are easily shaken by market volatility.
What Is A Bag Holder In Crypto?
A bag holder in crypto is an investor who has been holding his collection of crypto in pursuit of finding a better opportunity for a long time but opposite to his expectation, he losses the existing opportunity as well. In other words, a crypto bag holder is a person who has bought crypto at a higher price and the market went bearish after that and now he has a lot of coins but cannot sell his coins. He is left with no other option but to hold. In reference to this phenomenon, a well-known name has been conceived: HODL. A crypto bag holder is steadfast in all circumstances, regardless of whether the market is soaring or plunging.
HODL, an acronym for “Hold on for dear life”, was popularized in crypto when a user named Gamekyuubi on a Bitcointalk, an online forum, misspelled the word “hold”. This is exactly what a bag holder does.
Investors have incessantly acknowledged that cryptocurrency is not a get-rich-quick scheme with crypto market gyrations. Crypto demands time, effort, and skills for one to mint millions from it successfully.
It is requisite for bag holders to hold their digital assets for quite a significant chunk of time constantly thinking that cryptocurrency will be the next big thing in the grand scheme of things.
The advent of the Internet marked the beginning of a golden age. Experts liken crypto to the early 2000s, which saw the surge in internet usage. Firms can now do their everyday operations online without holding in-person meetings or other such activities.
Putting everything to the side, the globe is inching closer and closer to a period in which fiat currency will be a thing of the past. Fiat is struggling to keep its head above water due to rampant inflation, a widespread fall in standards of living, and limited opportunities for upward social mobility.
Numerous industry specialists believe that the value of cryptocurrency will skyrocket if a sizeable percentage of the general population has adopted it as a payment method. An inevitability that cannot be slowed down by the naysaying or casting aspersions as the establishment often does. For this reason, it is vital for investors to HODL to their respective bags regardless of the current state of the economy.
Historically, investors have been known to liquidate their assets when things get out of hand quickly. The great depression of the late 1920s and early 1930s is the perfect example of investors’ fear. But we can also learn from some of the big trailblazers. Warren Buffet, who is taunted as the greatest investor, perfectly fits the bill. He emphasizes compounding interests which mean holding on to your investments no matter what.
He has consequently amassed tens of billions of dollars due to this philosophy. The volatility of cryptocurrency demands that investors put aside their emotions. That is why bag holders cash in big when the prices spike and HODL when market forces connive and scheme against them. There is also another psychological effect referred to as the disposition effect, which plays a vital role in the mindset of investors. This effect has inculcated a tendency among investors to HODL on bad performing bags while quickly selling/trading bags that have spiked in value – a very nifty strategy to outwit market forces that are constantly and unpredictably turbulent. This has been proven to be the only way to enjoy and succeed on the cryptocurrency platform.