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The Various Types of Crypto Investors
Cryptos have been hyped as a strong contender for the next evolution of money. Their revolutionary features have always driven their growing interest as a means of exchange and asset.
Having had humble beginnings in 2009 as more or less a geek’s plaything, usage and investments have since surged. Investors, veterans, and newbies consider it a viable avenue to entrust their hard-earned capital.
The diversity in players investing in cryptos has profoundly affected each player’s type of investment strategy. In essence, various types of investors exist, as the article shall further expound on.
There’s always that casual investor looking to diversify their investment portfolio. They just so happen to be the bulk of retail investors in the crypto space. So the first crypto word that always comes to their mind is usually, as expected, Bitcoin.
How they came across it is usually quite a diverse and interesting matter. Maybe it was a suggestion from the plethora of trading apps they have installed. Or perhaps it’s that friend or relative that keeps singing Bitcoin at every single party after one too many sips of whiskey, like a hired brand ambassador.
Whatever the origin, it picked interest. They’re constantly monitoring the prices, looking at how much they made in the past hour or so. Constant monitoring also means they’re very trend-following investors, highly susceptible to panic sales. A sharp drop in prices and its sales all through, a key contributor to crypto’s price volatility.
Even then, they are the key drivers of cryptocurrencies’ mass adoption. In addition, their reliance on trading apps helps drive the blockchain evolution to make their onboarding much easier.
Also called Gen Z, it’s all about what’s trending for them. For the same reason, they’ll fork out significant amounts of money for that latest iPhone, so crypto investments are more than just investments. They are a way of life.
The older generation, largely comprising their parents, may see cryptos as a terrible idea, but not them. They’ll buy all the new, trendy coins and follow these coins’ websites and social media pages to form part of the community.
As natural rebels of the status quo, anything against the system is cool. The ongoing crusade by Governments against cryptos only serves to encourage them further. They are a leading group in adopting all the new crypto space inventions such as DeFi, yield farming, staking, etc.
Hodlers are as interesting as their name’s origins. The name ‘hodl’ comes from a misspelling in an old bitcointalk post. The poster proclaimed he would hodl rather hold his bitcoins even if the prices plummeted. So right there, the name was born.
They are the most prominent crypto investors, also doubling as the most diverse. A holder may have bottomless pockets, or their capital could be slightly shallow. They may be one of the pioneer investors in cryptos or a relatively recent entrant. What they have in common is their zeal for cryptos.
They weather the worst of crypto storms and bear markets, comprise the most vocal and avid crypto advocates, and reap the best bull run profits. Theirs is a close-knit society, and they never shy away from waging war against the current financial systems.
Hodlers believe in the future that cryptocurrencies have to offer and are settled in for the long haul. They can be viewed as the crypto space’s equivalent of fanatics, willing and able to see the distant ray of light others can’t see.
Professional traders have one thing in their mind, profits. What else could offer more profits in trading than exploiting price volatility? They are thus as attracted to exploiting crypto price swings as a bee is to nectar in flowers.
Many of them have been in crypto investments for quite a while. They have some good professional trading background, having been wolves on wall street or trading algorithms’ crafters, amongst others. They always have a keen eye on what possible price directions to expect. They move huge volumes to capitalize on favorable price swings anticipated, both as investors of their capital or asset investment managers.
Such traders may also trend set by doing pumping-dumping. They invest substantially in previously unknown coins with a small market cap. An effective marketing stunt on their part drives demand for the coin, pushing up prices for the target they had set and attracting new investors in droves. Once achieved, they sell their cryptos at outstanding profits, causing an oversupply against diminished demand, and there starts the crypto’s free fall.
These investors come as big as their name suggests. They have bottomless pockets and can make massive investments in cryptos, causing a wave. They may be a single Ultra High Net Worth Individual (UHNWI) or an institution.
Whales may be a common newbie, a hodler, a professional, or even an energetic millennial. However, the figures they intend to commit to the investments make them stand out compared to other investors.
Thanks to their size, they can unilaterally affect the direction of a coin’s value by hinting at their investment intentions. Such abilities make them highly sought after in the crypto space, as they may stimulate further investments down the line on a grand scale.
Most of them, especially the institutions, were initially skeptical of cryptos. However, their increased activities currently bring in much sought-out liquidity, their reach influencing more global acceptance of cryptos.
The crypto space is still evolving rapidly, with new blockchains being launched now and then. It earmarks a continued interest in the space from investors from all walks of life. All the listed categories of investors keep increasing across the board.
For whatever reasons investors choose to move their capital into cryptocurrencies, it is important to note one binding factor for all, returns on investments. Whether it is a Gen Z looking to follow what’s trending or a professional trader exploiting price volatility, losing money is not the goal. Moreover, this is what sets investing apart from betting.