Bag Holder Meaning & Definition

A bag is a large quantity of a given cryptocurrency which has been purchased as a part of an investor’s portfolio.

The title of bag holder is reserved for someone holding their bag for an extended period of time, regardless of significant market fluctuations.

Bagholders are known for keeping their bag even if the market price of the given cryptocurrency drops drastically. Some of these people hold their bag all the way to zero.

Why do Bagholders continue holding instead of cutting their losses?

The thought process behind a bag holder is sticking through a major dip in price in hopes for a trend reversal, where their portfolio eventually becomes profitable in the future.

Some bag holders only continue holding their asset simply because they forgot they ever purchased it in the first place.

Other people may be deemed bag holders if they merely lack the time and interest to constantly conduct market research and stay up-to-date in the performance of their bag.

One popular motivating factor for bag holders to hold is that there is some potential to make a profit, or at least minimize their losses, as long as they hold the line and don’t sell. As soon as the bag is sold, the investor takes the loss, thereby losing the potential to make any sort of gain, no matter how small.

HODL vs Bag Holder

Bagholders are analogous to HODLers, those “Holding On for Dear Life” during a downturn in the market.

In the field of human psychology this is known as the Disposition Effect.

It’s the natural human tendency for investors to sell assets which have increased in price while continuing to hold assets which have decreased in price. This is similar to the concept of cognitive dissonance, where actions are made contradictory to logic.

The idea is that people hate losing more than they enjoy winning, no matter how small the win is.

Does Being a Bag Holder Require a Specific Amount?

It’s not a specific amount but it usually refers to an amount of coins or tokens greater than most people own.