What Is a Bagholder?
There are many possible reasons for a trader of a specific project to become a bagholder. For one, sometimes traders believe so strongly in a project that they are unaffected by the short-term price action.
Another reason is that perhaps they missed out on the crash of an asset, where the asset price dropped so quickly they didn’t have time to make the trade. For example, many were left as bagholders during the crash of the Luna and Terra event, as it happened so quickly.
Another reason traders may become potential bagholders is when they become disinterested and completely forget about their investment. For example, without them realising, the price of their asset significantly drops and, at that point, once they check, they feel as though there is no point in selling because it is worth fractions of the initial investment.