There are several types of investors with different priorities, goals, habits, and risk tolerance. Read this article to find out what type of crypto investor you are and get some useful tips.
Type 1: Newbie
As the crypto market has a low barrier to entry, the newbie type is the bulk of retail investors. This big and diverse category includes people who know little about crypto but are curious to try and regular investors who seek to diversify their portfolio with new high-risk assets, promising incredible returns.
Newbies are important as they contribute to the promotion and wider adoption of cryptocurrencies. Due to this type, we have beginner-friendly exchange interfaces and easy-to-use mobile wallets. And, as many small retailers are unbanked, they spur the development of decentralized financial services.
Type 2: Crypto Enthusiast
Like a newbie, a crypto enthusiast entered the market not so long ago and probably lacks solid tech background or financial education. Most likely, it’s a millennial or a gen X who loves the perspectives crypto offers. He or she has already built a diversified portfolio that includes many hot coins and keeps checking their performance using the best-rated portfolio tracker.
These guys follow prominent crypto celebs in all the social media and are always ready to share their recently updated knowledge with friends. Also, crypto enthusiasts tend to be huge blockchain fans. They often talk about how this tech will replace traditional centralized systems and usher a brave new world.
Type 3: Early Adopter
Did you recognize the Bitcoin potential some years ago, when most people thought I was just a bubble or financial tool for drug-dealers? Did you buy 1000 BTC when the price was below $100? Or were you mining Bitcoin back in 2012 when it was easy and affordable? Congrats, you are an “early adopter”.
Early adopters are few, compared to other categories of crypto investors. Many of them have become rather rich, so now they prefer to keep a low profile — just like Satoshi Nakamoto, whose real-life identity remains secret.
But it’s not always the case. For instance, some members of this elite group have become passionate Bitcoin advocates, who promote crypto and blockchain globally. One of these BTC celebs is Mike Novogratz, a billionaire and the CEO of Galaxy Digital, famous for his bold BTC price predictions.
Type 4: Professional Trader
For professional traders, crypto is attractive because it’s highly volatile. Price swings that scare away a more cautious investor, give pros a chance for abnormally high returns. Naturally, volatility means high-risks, but it’s not a problem for aggressive investors who can manage their emotions. Often, these guys see crypto trading as a full-time or a part-time job.
You can recognize this type by the trading jargon they use. Also, professional traders have no emotional connection with any of the cryptos they buy and sell. Their main (and only) priority is making short-term profits.
If you are a trader who has recently joined the world of crypto, these articles may contain some things you don’t know yet:
Cryptocurrency Security Guide
7 Reasons to Invest In Cryptocurrency In 2020
What Affects the Price of Bitcoin and Other Cryptos
Type 5: HODLer
Hodlers are the investors who would rather hold crypto than do something else with it. The word appeared due to an old Bitcoin-related post with an accidental typo.
A hodler keeps their bitcoins no matter the swings. They hope that one day John McAfee’s price predictions will come true. According to statistics, this community is rather big. In fact, you find hodlers among various types of crypto investors.
Such a passive approach has its pros and cons. On one hand, a hodler avoids the stress and risks an active investor/trader has to handle. Their funds are 99,99% safe in a sturdy hardware wallet. On the other hand, a hodler can lose money if their coin misbehaves for some reason. Also, this strategy means that getting rich may take many years of patient waiting.
If you are a hodler, these articles will help you keep your funds safe and improve your strategy:
Bitcoin Private Keys: Everything You Need to Know
5 Factors That Determine Your Investment Risk Tolerance
Choosing a Cryptocurrency Wallet
What Type of Crypto Investor You Are: Conclusion
Hopefully, this article helped you to categorize some of your friends and understand what type of crypto investor you are. Note that these types are not carved in stone: for instance, a newbie can get upgraded to a crypto enthusiast or become an experienced trader.
And sure, anyone can become a hodler.