As cryptocurrencies gain popularity, more and more investors are entering the market. However, with digital assets still highly volatile, holding onto investments, particularly during times of uncertainty, is more important than ever.
In the world of crypto investment, two particular terms have become increasingly popular: “diamond hands” and ” paper hands.” These words describe the type of investor approach you take during times of market fluctuation, whether you hold onto your assets or sell them.
Understanding whether you are a “diamond hands” or a “paper hands” investor can make all the difference to your investment strategy.
Do you have Paper Hands?
A “paper hands” investor is one who buys and sells impulsively, prioritizing emotion over logic. They tend to be inexperienced and make predictable buying and selling decisions driven by fear, uncertainty, and doubt (FUD).
Why Financial Education is Important?
According to CNBC, 65% of US residents meet the paper hands profile when buying crypto. This hazardous behavior can be attributed to a lack of financial education and an insufficient understanding of how the market works. History shows that after a dip in the market, it often recovers, generating profits for those who have had the patience and long-term vision to stay invested.
Elon Musk Raises His Diamond Hands
“Diamond hands” is a popular term amongst investors to mean those who hold onto their investments even amid times of market volatility in order to meet their long-term objectives. The term originated on the subreddit r/WallStreetBets and gained widespread attention in 2021 when Elon Musk tweeted that Tesla had diamond hands.
Investors with diamond hands have a high tolerance for risk and the patience to wait for their investments to make money in the long term. They run a marathon, not a sprint. They hold onto volatile assets such as cryptocurrency, options, futures positions, and meme stock.
The Benefits of Having “Diamond Hands”
Keeping your diamond hands raised is not easy during periods of market volatility, but while they may see short-term losses, holding on to investments when the market is down can often lead to making significant gains in the long run.
In the financial world, banks, companies, and investment funds often have diamond hands, as they have the capacity to hold onto their investments without worrying about market fluctuations. However, individual investors can also benefit from adopting this approach and keeping their assets during periods of uncertainty.
The Bottom Line
Understanding the difference between diamond and paper hands is crucial in making informed investment decisions. While you cannot predict market movements, everyone can decide how to manage the ups and downs. Do you have the patience and long-term vision to hold onto your assets when it gets scary, or will you dump them at the first sight of a slump.
Whichever investment tool you opt for, it is crucial to choose one that has enough backing to support the ups and downs of the crypto environment. Unicoin is an asset-backed cryptocurrency designed to be profitable and stable and to weather volatility.