The current bear market has caused heartache and pain to some of the most passionate holders of digital assets - the hodlers. There can be psychological consequences too when one's net worth diminishes by hundreds (or even thousands) of percentage. The unparalleled growth of digital assets in 2017 encouraged most investors to hodl despite warnings from crypto figures such as Vitalik Buterin and Nouriel Roubini.
The recent months of crypto winter have shaken up the crypto world. The price of Bitcoin fell more than 80% below its peak level, wiping out billions of dollars of "wealth" from the crypto market. Much of this money was accumulated by long-time hodlers who were hoping for a huge return on their investments.
But far from being an issue of wealth or one of a financial nature, the effects of the market downturn can be felt mentally too. For a true hodler, long-term networkship can be a deeply spiritual experience as it involves forming an emotional bond with a project. So for every pinning blow of the bear market, a hodler's self-worth can take a substantial, symbolic hit.
Indeed, in a 2018 study which surveyed the behavior of Bitcoin investors, researchers concluded that the vast majority of participants (71%) had put a significant amount of their net worth into the digital currency. Whilst this may have been a sound investment decision back in 2017, the drastic drop in prices in 2018 had a strongly negative effect on the psychological wellbeing of investors.
The “hodl mentality” drove the market up in 2017 and this same channeling of emotion and dedication caused many to "ride the wave" years later, even with the bear market downslide. The fact is, being a hodler and sticking with an investment through thick and thin takes a strong degree of determination and faith in one's own convictions.
It may not always be possible for the average investor to make rational and informed decisions in today's challenging market environemnt. This is why it is so important for hodlers and investors to be aware of and equipped for the psychological effects that bear-market trading can bring. Seeking mental health counseling or assistance from support groups may also be essential for some investors.
The short-term outlook for the crypto-market may still be uncertain, but the long-term commitment of hodlers is clear, as is their ability to weather the worst of the winter season.
Hodlers of digital assets, who still remain committed to the prospects of Bitcoin and its peers, have proven to be an integral part of the crypto-world, capable of standing the test of time and market fluctuations. In order to ensure both financial and psychological wellbeing, hodlers must always approach the market with a degree of caution and due diligence.
Benjamin Anderson
- 2023-04-17
The Mental Effects of Crypto Winter on Hodlers
This article looks into the effects that the current bear market has had on passionate holders of digital assets - the hodlers -both psychologically and financially. It emphasizes that being informed and prepared through counseling and support groups is important in order to stay level during a bear market.
