What Is a Bag Holder?
This is an investor or trader who has been holding (or holding) a particular cryptocurrency for too long and now has to face the consequences of that decision.
In extreme cases, a bag holder has bought at a high and missed the opportunity to sell, leaving this person with worthless coins.
Understanding Bag Holders
According to the website Urban Dictionary, the term “bag holder” hails from the Great Depression, where people on soup lines held potato bags filled with their only possessions. Since then, time has emerged as part of the modern-day investment lexicon. A blogger who writes on the subject of penny stock investing once quipped about starting a support group called “Bag Holders Anonymous.”
A bag holder refers to an investor who symbolically holds a “bag of stock” that has become worthless over time. Suppose an investor purchases 100 shares of a newly public technology start-up. Although the share price preliminarily rises during the initial public offering (IPO), it quickly starts dropping after analysts begin questioning the integrity of the business model.
Subsequent poor earnings reports signal that the company is struggling, and the stock price consequently plummets further. An investor who is determined to hang onto the stock is a bag holder despite this ominous sequence of events.