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Should you’ve ever visited any funding or crypto boards, you’ll have heard the time period “bag holder.” It’s primarily used to explain retail buyers and has a adverse connotation.
What Is a Bag Holder?
A bag holder is a time period used to explain merchants and (primarily) buyers who’re holding onto belongings which have misplaced just about all of their worth. It originated throughout the Nice Melancholy when folks in soup strains held potato luggage with their solely possessions.
Trendy bag holders often have extra “belongings” than their namesakes from 1929, however they maintain onto them simply as tightly. Many individuals attribute bag holders’ habits to both ignorance, sunk value fallacy, or reluctance to confess that they’ve made a poor funding resolution — all of which result in them not exiting what are clearly shedding positions.
Bag Holder Instance
Right here’s an instance of a typical crypto bag holder: think about there’s a man named John, who in the future made up his thoughts to put money into cryptocurrencies. He noticed a bunch of moonings on the information and determined he additionally wished to make an enormous revenue. So, as an alternative of investing properly, he purchased some SHTC — a penny cryptocurrency that has been booming currently.
In fact, as an alternative of mooning or not less than locking in a decent common value, this crypto, which had no technical basis to talk of and an absent dev staff, has begun dropping in worth. Whereas many different buyers closed their positions and bought all their SHTC, John determined to carry on, not desirous to waste his preliminary funding and anticipating the coin to rise once more sooner or later. In fact, it by no means did — in a number of weeks, it collapsed to zero. John was left with nothing.
This can be an excessive instance, however bag holding is certainly quite common in crypto. It’s largely as a result of many buyers on this market are somewhat inexperienced and emotional and do not need an funding technique. So, to keep away from changing into a bag holder, we suggest you to apply investing with smaller sums first, hold a cool head, and, after all, DYOR!
Disclaimer: Please observe that the contents of this text usually are not monetary or investing recommendation. The knowledge supplied on this article is the creator’s opinion solely and shouldn’t be thought of as providing buying and selling or investing suggestions. We don’t make any warranties in regards to the completeness, reliability and accuracy of this data. The cryptocurrency market suffers from excessive volatility and occasional arbitrary actions. Any investor, dealer, or common crypto customers ought to analysis a number of viewpoints and be aware of all native rules earlier than committing to an funding.
