A paper hands is an investor who, upon seeing the market drop, rushes to sell their assets.
They are the exact opposite of a diamond hands. While a diamond hands holds onto their assets through thick and thin, a paper hand yields to the pressure and “folds” their positions.
In the crypto ecosystem, this term is commonly used as an insult; paper hands are mocked for their lack of conviction, as well as their tendency to succumb to FOMO (Fear Of Missing Out) the moment a green candle appears. Nevertheless, having paper hands can sometimes be a lifesaver: by abandoning projects destined to fail, it allows an investor to safeguard a portion of their capital. On the other hand, the diamond hands, driven by absolute confidence, would rather go down with the ship than sell their position.
The dynamic between paper hands and diamond hands—and the “fear” or “pride” of being associated with either camp—should never influence an investor’s decisions. It is better to be seen as a paper hand by the community when the ship is truly sinking than to sink with it. Conversely, selling at the slightest dip in a market as volatile as cryptocurrency will often prove to be counterproductive.
In crypto like in finance, it remains important to utilize money management techniques and to deeply understand the assets you invest in. This makes sure that you stay an informed investor who won’t be swayed by either side’s siren calls.
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