One of your cryptocurrency holdings just did a 2X jump in price, this leaves you with two options; ‘Hold on for dear life (HODL)’ or ‘dump!’. In the current crypto space, the later is the case most times. Cryptocurrency investors tend to take profit as soon as possible, the HODLing spirit seems to be a mere shadow of itself in our contemporary cryptosphere. Prior to this ‘dump and take profit’ era, buying/earning cryptocurrencies and holding on to them for a long time has always been the more popular tradition.
It will be too hasty to call the HODLing practice a thing of the past, as a matter of fact, it is very much alive, being a bag holder of a few cryptocurrencies I can attest to the fact that a good percentage of cryptocurrency investors and enthusiasts still hold on to their cryptocurrencies for a very long time amidst price fluctuations and other events surrounding the project in question.
The success story of Bitcoin and several other early cryptocurrency projects keeps investors believing in new projects and the promises they make, and also in existing projects which still appears to hold many potentials. Investors always hopes that the cryptocurrencies in their portfolio lives up to the expectations and makes massive return on investment (ROI) in a space of time.
Unfortunately, things don’t always stay rosy. Yeah, I mean, those red charts are scary! Due to certain circumstances, investors are forced to sell, either taking profits lower than expected or running into losses of different severity in the process. Worst case scenario, sometimes, these projects go on to make many more gains or recover from the downtrends and go on to massive gains, leaving investors even more bitter.
Just a quick question What exactly happened to the HODLing spirit? . For some reasons I just had to ask, but actually it’s reasonable to leave the ship before it drowns. Every cryptocurrency investor is scared of being a bag holder of a dead project with no hope of at least returning their initial investment. Hence the struggle is to make profit but most importantly, not to run into grave financial losses. The later is the main reason investors prefer to take current profit rather than wait and sell at the peak price, which unfortunately is uncertain.
Guess it's time to leave this ship! source
Rather than play with uncertainty, why not take the little you currently can? Most investors will do so, especially with the waves of unfortunate events in the crypto space. The fact is, the HODLing spirit is dying, but it’s not suicide, it’s a murder act. Contemporary Crypto investors are more scared than ever, due to several unscrupulous activities in the crypto space, it’s hard to trust any cryptocurrency project…at least not for a very long time. Most times investors dump their stakes in a project, it turns out they made the right choice, they got out on time!
It is impossible to completely point out the culprits in the death of the enthusiasm to HODL. But its very worthy to note issues such as
Infeasible proposals and project failure.
New projects present possible means of solving certain problems, maybe in data science, in AI or whatever the issue may be. Their ability to convincingly present these proposed solution wins them their investors. Convinced investors buys into the project with huge trust on not only the solution but also on the fact that solving the problems will even bring more investors who will be ready to commit more to the project, in cryptocurrency, these investors are expected to be willing to buy the tokens at much more higher price than the former/initial price. Hence, they buy, according to their expectation…and greed as the case may be.
But when this is impossible, the project falters, just like a capsizing ship, it all goes south! Probably the projects owners’ solution was simply not feasible or the solution was never genuine and is only another trick to syphon money from investors. Sometimes both is the case, investors run into losses, grave losses.
This is very popular situation in cryptocurrency; with over a thousand completely dead cryptocurrency projects, investors are quick to learn from their past experiences and also from stories they hear. It is understandable that they take profit immediately their new investments makes a little profit or sell even at loss with the slightest FUD information.
Exit scams and cryptocurrency frauds
Alright, “the team behind this project is no where to be found, as a matter of fact, they’ve dumped their stakes in the project”, investors run into stories like this. And in moments like this they have been fooled. Many cryptocurrency teams have reported abandoned their projects after dumping the tokens on their investors and running off with the profits they made from this project.
The investors were wrong to trust them in the first place, maybe they should have taken their profits during the last price pump. Getting fooled the second time becomes a scare for investors, putting trust in a project for a long time appears to be just a lee-way to another heartbreak, it’s reasonable to dump with little profits than stay back and get scammed…again. Many other sorts of cryptocurrency frauds scare away long-term investments in cryptocurrency.
Dump it and run! source
While many investors are not afraid of periodic price valuation, they are scared of being bag holders of a dead project with no hope of revival, the fear that every hope could be lost keeps long term investors away. Half a bread is better than none, they say, so dump it and run!.
Price manipulations and insider trading.
Knowing fully well that some price movements are not caused by more investors joining the ship of by normal market dynamics, it is reasonable to sell at current profit, when the manipulations, price may fall back to record lows. Price manipulations in cryptocurrency is a big scare in cryptocurrency. And investors are skeptical about holding on to their investments for a long time, rather, they predict the trend of the manipulation and sell off when it seems the manipulation is at the peak positive. Why hold on when the price movements are never due to increased but a mere bull trap by the project team.
These tops my list of possible reasons why investors are currently scared of holding on to their cryptocurrency investments for a long time, the list is inconclusive. Get involved! Let us know what you think are the possible cause of the ‘dump’ trend in cryptocurrency.