Understanding Crypto Bag Holders and Their Mindset

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For the first time in centuries, paper money, or fiat, has found its true competition in the internet age. When Bitcoin (BTC) debuted in 2009, the fiat ecosystem was not only challenged to prove its worth in everyday transactions, but also to protect the investment ecosystem it helped build.

Over the years, the crypto ecosystem has attracted people from all walks of life, catering to 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 drew investors’ attention to the fledgling ecosystem.

The freedom to stick with what makes the most financial sense has spawned 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

Since the day Bitcoin showed its cross-border supremacy after being used as a currency on the dark web, many investors have witnessed a true peer-to-peer monetary system for the first time. What followed was a promise to stick with Bitcoin and see it dominate centralized entities, bringing power back into the hands of the people.

This full support for Bitcoin and the belief that BTC is the only true substitute for the fiat economy gave rise to the term Bitcoin maximalism. Bitcoin maximalists have repeatedly advised community members to hold onto their assets during the bear market. They often recommend buying the dip – a process that involves investing in crypto during poor market performance. And over the past decade, the recommendation has been verified.

#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, growing exponentially smarter, faster and stronger behind a wall of encrypted energy.

— Michael Saylor⚡️ (@saylor) September 18, 2020

However, maximalism is not limited to Bitcoin. It has also spread widely in other crypto ecosystems. Investors and crypto enthusiasts who have dedicated years to growing their favorite blockchains and cryptocurrencies have a similar belief pattern to Bitcoin maxis. Ether (ETH), Dogecoin (DOGE), Shiba Inu (SHIB), and XRP (XRP) are the few major cryptocurrencies that have attracted loyal maximalists over the years who continue to preach the strength of their respective tokens.

HODLers

Hodlers are the type of crypto investors who believe in making long-term investments. This type of investor does not shy away from the famously volatile market swings and instead focuses on accumulating cryptocurrency tokens over time.

#HODL

— CZ Binance (@cz_binance) November 13, 2020

Hodlers can be found in all crypto ecosystems and are known to be the toughest of the bunch. For new Bitcoiners, the dream behind hodling is to accumulate at least one BTC over time. Through numerous halving cycles and resulting scarcity, Bitcoin holders envision a future when their investments generate a return unimaginable in a traditional fiat setting.

This dream seems more achievable for other cryptocurrencies given that investors can accumulate a large bag of tokens using comparatively lower funds. Some millennials and generation z’ers prefer to buy thousands of tokens even in hopes of hitting the jackpot during bull markets.

FOMOers

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

Fomoers tend to react negatively to all market conditions. When the price of cryptocurrencies increases, these investors buy more tokens hoping that prices will continue to rise. However, this approach does not always yield successful results. As a result, they often end up buying the high and selling the low.

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

To get out of this mindset, you have to study the market in depth while putting aside the noise of misinformation. Additionally, prominent crypto entrepreneurs often advise against fomo-ing and ask the general public to focus on the big picture.

Traders

They are the simplest investors who mainly focus on day-to-day prices looking for opportunities to make profits. Traders closely monitor market sentiment, new developments and regulations to gauge the market reaction.

Regardless of whether prices go up or down, traders are ready to take advantage of market fluctuations by sucking or shorting. The need for liquid tokens for trading forces traders to store a significant amount of their assets on crypto exchanges. However, the 2022 FTX fiasco is a reminder that self-custody is the ideal way to store cryptocurrencies.

In fact, every type of crypto holder can potentially make a lot of money buying and selling cryptocurrencies if they know the real strategy. See how Cointelegraph Markets Pro members successfully generated 120x returns using advanced machine learning algorithms and news indicators for trading opportunities.

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