Crypto investors: HODLer or trader—which one are you?

The cryptocurrency markets are buzzing with activity. From beginners to seasoned investors, everyone wants to be a part of the crypto frenzy. While extreme volatility has kept some investors on the sidelines, others have used the same volatility for quick profits.

However, like any other market, the cryptocurrency market has its list of benefits and risks, and investors / traders invest / trade depending on multiple factors, such as the capital involved, their ability to take risks, the price outlook, among others. other things.

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Based on their investment profiles and behavior, cryptocurrency investors can be classified as follows:

Crypto-curious beginners: These are novice investors interested in venturing into the crypto market likely because they stumbled on its performance when it was booming. They are not aware of high volatility and may even increase market volatility as they are prone to making decisions based on emotions rather than solid underlying factors. They are also generally not aware of the potential downsides of investing in cryptocurrencies. There are risks associated with all types of investments, and not all cryptocurrencies show a movement similar to that of market indices.

Market developments can easily overwhelm crypto beginners. A cursory look at the current situation in the world of cryptocurrencies is enough to create panic, especially since it is going through a period of correction and prices are at one of their lowest levels in months. In just over a month, for example, nearly $ 1 trillion in crypto market capitalization has been wiped out.

Without the advice of a professional, newbies to crypto are also vulnerable to misinformation. It is imperative that you seek clarity in order to separate the good information from the bad. It is also recommended that such investors do not bite off more than they can chew, only invest what they can afford to lose.

It is crucial for beginners who are curious about cryptocurrencies first to educate themselves on the fundamentals of the cryptocurrencies they want to invest in and to do due diligence before deploying money.

The Crypto HODLers (Long-term asset holders): This stratum of investors has already put a finger on the cryptocurrency market, and some of them may have been burned a few times as well. However, they still lack the insight needed to consistently make profitable calls.

Their inability to trade effectively causes them to hold onto their crypto assets even through market turmoil. Therefore, HODLers are fully aware that the crypto market works in cycles just like the stock market, which means that they are aware of the inevitable downtrend that follows a rally.

HODlers believe they will be rewarded in the long run when the value of their assets is significantly higher. They are always waiting for the market highs to clear and make a profit.

Since HODLers can survive market crises, some even ignore the need to withdraw money in the long term. This is driven by his hope that cryptocurrencies will eventually become accepted modes of payment and not have to be sold.

Why the term HODler? It is believed to have been an inadvertent error in writing that some believe was later used as an abbreviation for "Clinging to life." The actual origin is not exactly known.

Crypto Veterans (Traders): Investors who have entertained the crypto markets through the highest peaks and the deepest depressions know exactly what the market has in store. They can identify the right times to make buy / sell decisions so that they always outperform the average investor and make money regardless of which direction cryptocurrency prices are moving.

These guys usually trade in high volumes to make big profits from their buy / sell decisions and are also known as 'crypto whales'. They can also be the educators / advisers to the two categories of investors above, seasoned by their vast experience.

Cryptocurrency natives are interested in building a strong portfolio that generates considerable long-term returns. Their area of ​​focus is rarely survival, and they are in it to capitalize on reserve moments of profit.

These investors often have the stomach for high-risk, high-yield transactions and can comfortably make their way through market downturns. They stay current to maximize their chances of making a profit when they enter or exit their investments at the time they choose.

It is important to note that these are only broad categories of investors and multiple factors can determine which list an investor should fall on. Investing in the crypto market is like investing in the stock market with two key differences: (1) fundamentals vary dramatically, and (2) volatility is significantly higher.

However, investing in any of the asset classes requires a close reading and an understanding of the underlying principles that govern their price movements. As with any other investment, only through thorough research and experience can one become a veteran.

(Edited by : Jomy if it's bottled)