When the crypto industry came about in 2010, fiat currency finally met its match. Bitcoin made its debut in 2009, and it transformed the face of currency by challenging the fiat ecosystem. After the industry was set up, the crypto sphere attracted a lot of investors from different backgrounds.
These investors served their personal financial needs while attempting to fill up the gaps that the fiat currency system was unable to. Initially, most people watched from afar while attempting to figure out the potential of cryptocurrencies. Then, the first round of Bitcoin millionaires channeled investors’ focus toward the new crypto market.
With the crypto market came the freedom for investors to adopt whatever made the most sense to them financially. This led to the development of various investor classes, each of which had a unique intention behind their crypto investments.
Maximalists and HODLers Have The Strongest Approaches
After Bitcoin showed that it was beyond geographical boundaries and national borders, investors spotted a real P2P monetary system. After that, they pledged to stick by Bitcoin’s side as it overpowered fiat currency and centralized institutions. These investors envisioned a system that would bring power into the hands of the people.
Because these investors had such unconditional support for Bitcoin and the staunch belief that it could replace the fiat economy, they were dubbed as Bitcoin maximalists. These maximalists have advised the crypto community to continue holding their assets despite there being a bear market.
They usually recommend investors to ‘buy the dip,’ which means investing when the market is performing poorly. So far, their recommendation has led to steady gains for investors. In a similar vein are HODLers, who believe in making long-term crypto investments.
This category of crypto investors isn’t afraid of the volatile market and all its fluctuations. Rather, it focuses on accumulating tokens and ‘hodling’ them for a prolonged period.
FOMOers Make The Biggest Mistakes
This is a subset of investors who are known for making the biggest mistakes while investing. FOMO means ‘fear of missing out’ which refers to the apprehension concerning price movements. FOMOers have a habit of reacting adversely in each market condition. One example is that when the price of a certain cryptocurrency rises, they buy more tokens while hoping that the price continues to increase.
However, this approach rarely gives them any fruitful results. Because of this, they usually end up buying at a high price and selling at a lower price. Usually, this crypto bag mindset is common among investors who don’t do proper research on the market and its conditions.
To avoid following the FOMO mindset when it comes to crypto investments, it’s important to study the market thoroughly. Moreover, one should cancel out the noise of misinformation that’s spreading on the internet.
Most major crypto investors recommend against acting on every bit of information that one sees on the internet. Instead, it’s best to look at the bigger picture and what’s happening in the market.
Traders Look at Day-to-Day Prices
Lastly, there are traders, who are the most straightforward type of crypto investors. This category of investors takes advantage of day-to-day prices in hopes of earning a profit. Of course, it still requires immense research. Traders have to look at market conditions closely to understand regulations, new developments, and investor sentiment.
So whether the market is trending upwards or downwards, traders are ready to cash in on price differences. They can do this by taking a long or short position on certain trades. Of course, there is also a need for liquid tokens that they can use for trades. Hence, traders have to store a large amount of digital assets on crypto exchanges.
A major disadvantage of this method is the risk involved in storing one’s cryptocurrencies on an exchange. With the collapse of various exchanges like FTX, it’s clear that self-custody is the best way to store one’s assets.