Understanding crypto bag holders and their mindset – Crypto News – Crypto News
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Understanding crypto bag holders and their mindset Understanding crypto bag holders and their mindset

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Understanding crypto bag holders and their mindset – Crypto News

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2 years ago

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For the first time since the 7th century, the paper-money economy found its true competition in the internet era. With Bitcoin’s (BTC) debuted in 2010, the fiat ecosystem was not only challenged with proving its worth in day-to-day transactions but also safeguarding the investment ecosystem it helped build.

Over the years, the crypto ecosystem attracted people from all walks of life — serving their unique financial needs while filling the gaps left wide open by the fiat ecosystem. While most of the world watched from the sidelines, trying to decipher the true potential of cryptocurrencies, the first batch of Bitcoin millionaires swayed investors’ attention toward the budding ecosystem.

The freedom to stick to what makes the most sense financially has sprouted various classes of investors, each distinguished by their intent behind crypto investments. Based on the overall approach taken by investors, there are four main categories of mindsets of crypto bag holders — Maximalists, hodlers, fomoers and traders.

Maximalists

Right from the day Bitcoin showcased its cross-border supremacy after being used as a currency on the dark web, numerous investors witnessed a true peer-to-peer monetary system for the first time. What followed was a pledge to stick with Bitcoin and see it overpower the centralized entities, ie, bringing power back into the hands of the people.

This total support for Bitcoin and the belief that BTC is the only true replacement for the fiat economy gave birth to the term Bitcoin maximalism. Bitcoin maximalists have, time and again, advised the community members to hodl their assets during the bear market. Instead, they often recommend buying the dip — a process that involves investing in crypto during the market’s poor performance. And over the last decade, the recommendation checks out.

However, maximalism is not limited to Bitcoin has spread widely across other crypto ecosystems as well. Investors and crypto enthusiasts that have committed years to the growth of their preferred blockchains and cryptocurrencies have a belief pattern similar to Bitcoin maxis. Ethereum (eth), Dogecoin (USDShiba Inushib) and XRP (XRP) are the few leading cryptocurrencies that have garnered loyal maximalists over the years that continue to preach the strength of their respective tokens.

HODLers

Hodlers are the type of crypto investors that believe in making long-term investments. This type of investor does not fear the infamous volatile market fluctuations and instead focuses on accumulating cryptocurrency tokens over time.

Hodlers can be found across all crypto ecosystems and are known to be the most resilient of the bunch. For new Bitcoiners, the dream behind hodling is to amass at least 1 BTC over time. Ultimately, through many halving cycles and the resultant scarcity, Bitcoin hodlers envision a future when their investments shell out a return unimaginable in a traditional fiat setting.

This dream seems more attainable for other cryptocurrencies considering that investors can accumulate a big bag of tokens using comparatively lower funds. Most Gen Z and a large subset of millennials prefer purchasing thousands of meme tokens in the hopes of hitting the jackpot during bull markets.

FOMOers

Fomoers are a subset of investors that end up making the biggest mistakes in investing. Fomo stands for “fear of missing out,” implying a feeling of apprehension related to price movements.

By design, fomoers tend to react adversely to every market condition. When the price of cryptocurrencies goes up, these investors buy more tokens hoping that the prices will continue to rise. However, this approach does not always yield fruitful results. As a result, they often end up buying the top and selling the bottom.

Related: Is it possible to achieve financial freedom with Bitcoin?

To get out of this mindset, one needs to study the market extensively while putting aside the noise of misinformation. Furthermore, prominent crypto entrepreneurs often recommend against fomo-ing and ask the general public to focus on the bigger picture.

traders

These are the most straightforward investors that primarily focus on day-to-day prices in search of opportunities to earn profits. Traders closely monitor market sentiment, new developments and regulations to gauge how the markets react.

Regardless of the prices going up or down, traders are ready to cash in on the market fluctuations by long or shorting trades, The need for liquid tokens for trading requires traders to store a significant amount of their assets on crypto exchanges. However, the FTX fiasco of 2022 is a reminder that self-custody is the ideal way of storing cryptocurrencies.

In reality, every type of crypto holder can potentially make a lot of money buying and selling cryptocurrencies if they know the real strategy. Check out how Cointelegraph Markets Pro members managed to make 120x returns with the help of advanced machine learning algorithms and news indicators for trade opportunities,