For the first time since the 7th century, the paper money economy found true competition in the internet age. With the debut of Bitcoin (BTC) in 2010, the fiat ecosystem was not only challenged to prove its worth in daily transactions, but also to maintain the investment ecosystem that helped build it.
Over the years, the crypto ecosystem has attracted people from all walks of life – serving their unique financial needs while filling the gaps left by the fiat ecosystem. While most of the world watches from the sidelines, trying to grasp the true potential of cryptocurrencies, the first batch of Bitcoin millionaires is drawing investors’ attention to the fledgling ecosystem.
The freedom to stick to what makes the best sense of the various classes of financial investors, each differentiated by their goals for crypto investment. Based on the overall approach taken by investors, there are four main categories of mindset of crypto wallet holders – Maximalists, hodlers, fomoers and traders.
Maximalists
Since the day Bitcoin displayed cross-border supremacy after being used as a currency on the dark web, many investors witnessed a true peer-to-peer monetary system for the first time. What followed was a promise to stick with Bitcoin and see it defeat centralized entities, i.e., bring power back into the hands of the people.
This total support for Bitcoin and the belief that BTC is the only true replacement for the fiat economy gave birth to the term Bitcoin maximalism. Bitcoin maximalists have, time and again, advised members of the public to hold assets during bear markets. However, they often recommend dip buying – a process that involves investing in crypto during poor market performance. And over the last decade, that recommendation has checked out.
#Bitcoin is a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing smarter, faster, and stronger behind the hidden energy wall.
– Michael Saylor⚡️ (@saylor) 18 September 2020
However, maximalism is not limited to Bitcoin and has also spread to other crypto ecosystems. Investors and crypto enthusiasts who have been committed for years to the growth of blockchain and their favorite cryptocurrencies have the same belief pattern as Bitcoin maxis. Ethereum (ETH), Dogecoin (DOGE), Shiba Inu (SHIB) and XRP (XRP) are some of the leading cryptocurrencies that have gained loyal maximalists over the years who continue to preach the power of their respective tokens.
HODLers
Hodler is the type of crypto investor who believes in making long-term investments. This type of investor is not afraid of fluctuations in the notoriously volatile market and instead focuses on accumulating cryptocurrency tokens over time.
– CZ Binance (@cz_binance) November 13, 2020
Hodlers can be found in all crypto ecosystems and are known to be the most resilient. For new Bitcoiners, the dream behind hodling to amass at least 1 BTC over time. Ultimately, through multiple halving cycles and resulting shortages, Bitcoin holders envision a future when their investment yields unimaginable returns in a traditional fiat setting.
This dream seems more attainable for other cryptocurrencies as investors can accumulate a large bag of tokens using less funds. Most of Gen Z and a large subset of millennials prefer to buy thousands of meme tokens in hopes of hitting the jackpot during a bull market.
FOMOers
Fomoers are a subset of investors who end up making the biggest mistakes in investing. Fomo stands for “fear of missing out,” indicating a feeling of anxiety related to price movements.
By design, fomoers tend to react to every market condition. As the price of cryptocurrencies rises, these investors buy more tokens in the hope that the price will continue to rise. However, this approach does not always produce good results. As a result, they often buy high and sell low.
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To get out of this mindset, one needs to study the market extensively while getting rid of the noise of wrong information. Additionally, prominent crypto entrepreneurs often advocate against fomo-ing and urge the general public to focus on the bigger picture.
Merchant
These are the simplest investors who focus mainly on the daily price to find opportunities to make a profit. Traders closely monitor market sentiment, developments and new regulations to gauge how the market will react.
Regardless of the price going up or down, traders are ready to cash in on market fluctuations by longing or shorting trades. The need for liquid tokens for trading requires traders to store significant amounts of assets in crypto exchanges. However, the FTX 2022 fiasco is a reminder that self-custody is the ideal way to store cryptocurrencies.
In fact, every type of crypto owner has the potential to make a lot of money buying and selling cryptocurrencies if they know the right strategy. Check out how Cointelegraph Markets Pro members can earn 120x with the help of machine learning algorithms and news indicators for trading opportunities.