Cryptocurrencies have been heralded as a potential candidate for the next monetary evolution. Their numerous groundbreaking characteristics have always fuelled increasing interest in them as a medium of trade and an asset.
Following its modest beginnings in 2009 as more or less a geek's toy, use and investment have exploded since then. Investors, both seasoned and novice, continue to see it as a viable option for entrusting their hard-earned money.
The variety of players investing in cryptos has had a significant impact on the types of investment strategies used by each investor.
Newbie
There's still the haphazard investor looking to diversify their holdings. They just happen to make up the majority of retail cryptocurrency investors. The first crypto term that normally comes to mind is, predictably, Bitcoin.
It's usually quite a diverse and fascinating matter how they come across it. Perhaps it was one of the many trading apps they have built that suggested it. Perhaps it's that friend or relative who, like a hired brand ambassador, keeps singing Bitcoin at every party after one too many sips of whiskey.
Whatever the source, it piqued people's interest. They're still keeping an eye on the prices, calculating how much money they've earned in the last hour or so. Constant tracking also makes them trend-following investors who are vulnerable to panic selling. A sudden decline in stocks, followed by a sell-off, is a major factor in crypto's market instability.
Even so, they are the driving forces behind the widespread acceptance of cryptocurrencies. Their dependence on trading apps aids the evolution of the blockchain, making their onboarding even simpler.
Energetic Millenials
It's all about what's trending for Gen Z, also known as Generation Z. They'll pay a lot of money for the new iPhone for the same reason, but crypto investments are more than just an investment. They're a way of life for them.
Cryptos may be seen as a bad idea by the older generation, which mainly consists of their parents, but not by them. They'll not only buy all of the latest, fashionable coins, but they'll also visit their websites and follow them on social media to become a part of the group.
Anything that goes against the establishment is fine to us because we are natural status quo revolutionaries. Governments' ongoing crusade against cryptos only strengthens their position. They are the first to embrace all of the latest crypto innovations, such as DeFi, yield farming, staking, and so on.
Hodlers
The roots of the name Hodler's are fascinating. The name ‘hodl' is derived from a misspelling in an old bitcointalk thread. Even if the price of bitcoins plummets, the poster declared that he would hodl rather keep his bitcoins. The name was born right there.
They are the most well-known cryptocurrency investors, as well as the most diverse. A holder's pockets may be bottomless, or their capital may be restricted. They may be one of the first crypto investors or a newcomer to the market. What they all have in common is a passion for cryptography.
They survive the worst crypto storms and bear markets, are the most outspoken and ardent crypto supporters, and benefit the most from bull runs. Their family is close-knit, and they never hesitate to wage war on the existing financial structures.
Hodlers believe in the potential of cryptocurrencies and are prepared to invest for the long term. They can be likened to crypto-fanatics, since they are ready and able to see the distant ray of light that others cannot.
Professionals
Profits are the only thing on the minds of skilled traders. What could be more profitable in trading than taking advantage of market volatility? As a result, they're as drawn to crypto price spikes as a bee is to nectar in flowers.
Many of them have been involved in cryptocurrency investments for a long time. They have a solid technical trading history, having worked as wolves on Wall Street or as traders who create trading algorithms, among other things. They are still keeping a close eye on potential price movements. They transfer vast volumes in order to benefit from expected favourable market fluctuations, whether as capital investors or asset investment managers.
Pumping-dumping can also be used by such traders to set trends. In other words, they put a lot of money into previously unknown coins with a limited market cap. They use a clever marketing stunt to increase demand for the coin, driving prices up to the target they set and attracting a slew of new investors. If they've done this, they sell their cryptos for a huge profit, resulting in an oversupply versus low demand, and the crypto begins its free fall.
Whales
These investors are as colossal as their name implies. They have limitless funds and can make big crypto investments, creating a ripple. It may be a single Ultra High Net Worth Person (UHNWI) or a group of UHNWIs.
Whales may be a novice, a hodler, a specialist, or even a vivacious millennial. In comparison to other investors, they stand out because of the amount of money they plan to put into the investments.
Because of their scale, they may arbitrarily influence the value of a coin by merely hinting at their investment intentions. Such abilities make them highly sought after in the crypto sector, as they have the potential to spur large-scale investment in the future.
The majority of them, especially the institutions, were initially sceptical of cryptos. Their increased activities are currently bringing in much-needed liquidity, and their reach is playing a role in increasing global adoption of cryptos.
Final Thoughts
The crypto space is still rapidly evolving, with new blockchains being introduced on a regular basis. It indicates that investors from all walks of life are still interested in the space. Across the board, all of the listed categories of investors are rising.
Whatever purpose investors want to put their money into cryptocurrencies, there is one thing that unites them all: returns on investment. Losing money is not the target for a Gen Z looking to track what's trending or a skilled trader leveraging market volatility. Furthermore, this is what separates investing from gambling.
