What is a “Bag” in Cryptocurrency?
A Bag in cryptocurrency is a slang term for a large quantity of a specific cryptocurrency held by one investor. Sometimes, a bag also refers to an individual’s total crypto portfolio.
For example, if Sam had 1000 ETH in his crypto wallet, he would say he had an ETH bag. But if Sam also had 1 BTC, 10,000 USDT, and 5000 XRP in the same wallet, he would call that his “bag” of crypto.
The term describes a large amount of cryptocurrency (e.g., Sam’s 1000 ETH). But there is no specific threshold after which an investor starts holding a “bag.”
What are Bag Holders?
Bag holders, a closely related slang term, is related to individuals who hold a bag of crypto. This term is usually used to describe an investor who bought a cryptocurrency at a high price and held onto it even after a significant price decline.
There are two psychological reasons why an investor becomes a bag holder. Let’s review them:
- Disposition Effect: This effect describes how investors are psychologically more prone to holding on to cryptocurrencies that perform poorly, hoping they will bounce back.
- Sunk Cost Fallacy: This effect makes investors feel like they have invested too much liquidity in a cryptocurrency to pull out, hoping they will recover their losses.
History of bag holders
The term “bag holder” first emerged in traditional finance. The definition was the same as someone who holds it for a long period of time despite price depreciation.
Suppose an investor bought shares of a newly traded company with price appreciation. However, Wall Street analysts had other ideas. They informed the market about its doubts about the company’s growth and the stock price drops.
A normal investor will sell that stock for a minimum loss and move on. A bag holder would hold those stocks until their value went to zero.
What is a Crypto Moon Bag?
Moon bags are large quantities of a certain cryptocurrency held for a long period of time. Investors who hold it expect the price to rally or “reach for the moon.”
These tokens are held for months or even years and are never sold in the hope that the underlying project will prove its utility and these tokens will appreciate in value.
