Bagholding refers to a situation where an investor holds onto a cryptocurrency that has lost significant value, often hoping for a future price recovery. This typically occurs after a sharp decline in the asset’s price, leading investors to feel stuck with their holdings. Often, bagholders buy in at a high price, lured by promises of rapid gains or strong hype.

When the market turns or a specific project fails, they face steep losses but may resist selling out of fear of further losses or the hope that the price will rebound. The term can carry a negative connotation, as it implies poor decision-making or a lack of market awareness.

Bagholders might ignore warning signs, cling to their investments, or continue to hold out for a potential turnaround. In the long run, bagholding can lead to emotional stress and financial strain, as investors become overly attached to their assets despite the changing market landscape. It serves as a cautionary tale about the risks involved in speculative investing.