The 4 Different Types Of Crypto Investors in India
In the emerging cryptocurrency market, there are lots of different types of crypto investors who are looking to dip their metaphorical toes into the water. While some people buy random coins, praying for them to rise, others put a lot more thought and research into figuring out the technical and fundamental aspects of their investments. To make money in this extremely volatile market, you, as an investor, need to be cognizant of your risk appetite. The amount of risk you’re willing to take, the capital you have, the amount of time you can afford to put into your crypto investments, and the research you do will determine the kind of investor you are. Making these decisions with all aspects considered is the best way to approach your journey as a crypto investor.
Experts believe that cryptocurrencies and blockchain technology have the potential to reinvent many industries and streamline their processes digitally. The tell-tale signs of a massive revolution in the tech industry are already apparent to many, with thousands of different tokens and coins being created every week to make everyday transactions easier.
That being said, the crypto market is still a little young and unstable compared to other asset classes like stocks and bonds. The market has not fully matured yet, with investors still hesitant to enter, fearing volatility and short-term losses. That is the reason new investors (and others who already have a small portfolio) need to find out what kinds of investors they are and adjust their investment strategy accordingly.
Types of Crypto Investors
Here are the 4 kinds of crypto investors in the markets right now:
- Beginners – Beginners are the newcomers to the world of cryptocurrency. Most beginners are not very knowledgeable about the intrinsic value of cryptocurrencies and invest in them willy-nilly. They tend to lack the specific knowledge required to understand the crypto market and end up making loss-making trends. These investors are the ones that need to educate themselves and start to learn the difference between reliable and misleading information. Beginners also tend to trade in cryptocurrencies based on their feelings, which rapidly fluctuate, just like the crypto market. Since their trades and investments are not backed by extensive research and facts, they are prone to booking losses early on.
- HODLers – Holding On for Dear Life. As the name suggests, these investors are people who have gathered a little bit of experience in the markets but don’t have the ability or the interest to trade in cryptos on a regular basis. Instead, they Hold On to their coins and tokens for Dear Life and believe in the long-term application of their investments. The name HODLers originated from a type of investment strategy in 2013 when a large investing demographic held on to their Bitcoin during a downtrend after it hit an all-time high price in November 2013. HODLers understand the volatility of the crypto market and are prepared to weather the storm, so to speak. They accept that the inevitable down and up trends of the market are not their cup of tea and they’d be much better off betting for the long term. They are less prone to being emotionally invested in their crypto coins and make better decisions than beginners. They’re always on the lookout for the best moment to cash out and make money, which makes them vulnerable, because crypto markets are extremely hard to time, even for experts. HODLers often anticipate (and often bet on) a future where cryptocurrencies are accepted as legal tender, replacing fiat currencies altogether. They believe in holding their currencies not for making short-term gains, but to use them later on as actual currencies. The problem: how long will they have to wait?
- Traders – Traders are the ones with the most experienced in the markets. They’re well-read about the fundamentals and technicalities of cryptocurrency and bet on the everyday volatility of the market to make money in the short term. Traders are the people who use mathematical principles, accurate calculations, and huge amounts of capital to exploit minute price changes in the market. Traders, unlike the HODLers, are in it for the short term. They don’t care about the intrinsic value they could be getting by holding crypto long-term and investing in coins for the big bucks. For traders, following governmental regulations and crypto news updates are extremely important because these factors affect prices highly. Predicting the movement of the market earns them their returns and over time, they aspire to be as accurate as humanly possible.
- The early adopters – The early adopters knew about the potential of Bitcoin when others thought it was a scam or a tool for illegal online transactions. They started mining/collecting Bitcoin and other currencies when they were available in the market for dirt cheap rates. The early adopters are the people who are genuinely interested in technology and make it a point to get in on the fun before the party starts. Early crypto adopters are often Bitcoin investors because BTC was the first coin in the market. Some early adopters also became famous when BTC blew up, giving them the power to move prices by merely posting a tweet about a token or a coin.