In cryptocurrency slang, the word Bagholder (from English bag) refers to an investor who is 'stuck' with tokens or coins that have lost a significant part of their value. Such a person continues to hold a 'bag' of worthless assets, even though the market has long moved on.
How did the term come about?
The term came from the stock market and was originally used negatively. A 'Bagholder' is someone who ended up with a 'bag' of stocks after everyone else sold and made a profit. In crypto, the term has an even more pronounced meaning because the market here is much more volatile, and many projects can lose 90%+ of their value in just a few weeks.
Who becomes a Bagholder?
1. Newbies bought on hype, believing in 'eternal growth'.
2. HODLers without a strategy hold the coin just because 'someday it will grow'.
3. Optimists believe that the team will 'revive the project', even though it is actually dead.
4. Players without stop-losses do not realize losses until they become critical.
Examples from the crypto market
LUNA holders after the Terra crash in 2022. Many bought at $100+, and now they hold a token that has dropped by 99.9%.
Buyers of 'meme coins' (Shiba Inu, Dogelon Mars, etc.) at the peak of hype.
Investors in ICO projects from 2017, most of which never went public.
Why do people become Bagholders?
Sunk cost fallacy: 'I have already invested, so I can't sell at a loss.'
Hope: the belief that the asset will 'someday' shoot up again.
Lack of strategy: buying on emotions without an exit plan.
How to avoid becoming a Bagholder?
1. Plan your exit points. Write down in advance at what growth you will take profit and at what decline you will take losses.
2. Do not fall in love with the asset. Token ≠ belief, it is just a tool.
3. Diversify. Do not invest everything in one coin.
4. Keep an eye on the fundamentals. If the team has left and there are no developments — do not expect a miracle.
Conclusion: A Bagholder is a person stuck in the past market. To avoid becoming one, you need not just to HODL, but to manage risks and make unpleasant decisions in time.
