Understanding crypto wallet holders and their mindset

by · March 5, 2023

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

Over the years, the crypto ecosystem has 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 turned investors’ attention to the burgeoning ecosystem.

The freedom to stick with what makes the most sense financially sprouted into different classes of investors, each characterized by their intention behind crypto investments. Based on the overall approach taken by investors, there are four main categories of mindset for holders of crypto wallets: maximalists, hodlers, fomoers and traders.

Maximalists

From the day Bitcoin demonstrated its superiority across borders after being used as a currency on the dark web, many investors witnessed a true peer-to-peer monetary system for the first time. What followed was a promise to stick with Bitcoin and see it overpower the centralized entities, putting 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 members of the community to hold on to their assets during the bear market. They often recommend buying the dip – a process that involves investing in crypto during the market’s poor performance. And over the past decade, the recommendation is checking out.

However, maximalism is not limited to Bitcoin. It has also spread across other crypto ecosystems. Investors and crypto-enthusiasts who have committed years to the growth of their preferred blockchains and cryptocurrencies have a belief pattern similar to Bitcoin maxis. Ether (ETH), Dogecoin (DOGE), Shiba Inu (SHIB) and XRP (XRP) are the few leading cryptocurrencies that have gained loyal maximalists over the years who continue to preach the strength of their respective tokens.

See also  The crypto industry distances itself from Silvergate when the banks collapse

HODLers

Hodlers are the type of crypto investors who believe in making long-term investments. This type of investor does not fear the notoriously volatile market swings 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 accumulate at least one BTC over time. Through many halving cycles and the resulting scarcity, Bitcoin hodlers envision a future when their investments yield unimaginable returns in a traditional fiat setting.

This dream seems more attainable for other cryptocurrencies considering that investors can accumulate a large bag of tokens using relatively lower funds. Some millennials and Gen Z’ers prefer to buy thousands of meme tokens in hopes of hitting the jackpot during bull markets.

FOMOers

Fomoers are a subset of investors who end up making the biggest mistakes when investing. Fomo is short for ‘fear of missing out’ and suggests a feeling of apprehension related to price movements.

Fomoers tend to react negatively to all market conditions. When the price of cryptocurrencies goes up, these investors buy more tokens in the hope that 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 has to study the market thoroughly and at the same time put aside the noise of misinformation. Also, prominent crypto-entrepreneurs often advise against fomo-ing and ask the general public to focus on the bigger picture.

See also  Tron Founder Bets 150,000 ETH - The Cryptonomist

Traders

These are the most simple investors who primarily focus on daily prices in search of opportunities to make money. Traders closely monitor market sentiment, new developments and regulations to gauge how the markets are reacting.

Regardless of whether prices go up or down, traders are ready to profit from market fluctuations by long or short 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-storage is the ideal way to store cryptocurrencies.

In reality, all types of crypto holders 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 using advanced machine learning algorithms and news trading opportunity indicators.