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"Long-term Diamond Hands" vs. "Short-term FOMO Paper Hands": Who Will Prevail?

Author: Icefrog

"At that time, I was too young to realize that every gift of fate carries a hidden price tag." — Stefan Zweig

1. The Casino Theory of Crypto: Luck or Skill? Success Lies in Simplicity

Whether a game is gambling ultimately boils down to one fundamental question: is it a "game of luck" or a "game of skill"? Undoubtedly, in the early days of the crypto space, luck played a major role. If you dared to take risks, you were rewarded handsomely, as early explorers of this space were generously compensated.

As the industry has matured, stories of sudden wealth in crypto still appear, but luck-driven victories have become increasingly rare. For every tale of overnight riches, there is a corresponding story of catastrophic loss.

Luck grants you opportunities, but skill transforms those opportunities into wealth. From today’s vantage point, retail investors must acknowledge that while luck still exists in crypto, the importance of skill is growing.

What, then, is the ultimate skill for winning in crypto? Opinions vary. Some champion short-term mastery, like being a technical analysis (TA) expert; others vouch for long-term conviction, like value investors. However, both strategies have examples of triumphant champions as well as devastating losers.

For an ordinary retail investor like me, the key to victory is embracing low-difficulty strategies. The golden rule for the majority is this: simple, low-risk investing is your best path to success.

Being a "diamond hand" or a short-term FOMO trader is undoubtedly a high-difficulty game.

2. Survivor Bias of Diamond Hands: Can You Handle It?

Before discussing diamond hands, let’s start with the premise that we are talking about a truly average Web3 participant—someone with no extraordinary talent, shaky TA skills, and a tendency to lose money due to impulsive trades. With that in mind, let’s assess the probability of a regular person becoming a diamond hand, so you can set realistic expectations.

The term "diamond hand" originated on forums like Reddit. It refers to investors who refuse to sell their holdings, no matter how volatile the asset.

This definition implies two conditions: high-volatility financial assets and unwavering resolve to hold. Long-term holders of gold, for instance, don’t typically earn the diamond-hand title. Only those who hold through the turbulence of speculative markets and emerge victorious can claim this honor.

In the high-stakes world of crypto, where fortunes are made and lost in the blink of an eye, everyone dreams of being a diamond hand. Yet, few achieve this status—most are lost in obscurity, while a select few ascend into legends.

To be a diamond hand, you must possess these qualities:

  • Exceptional foresight + luck: You must identify an asset’s potential for exponential growth before it happens and recognize its certainty of success.
  • Ample disposable capital: You should have enough surplus funds to invest without compromising your lifestyle or mental state.
  • Unwavering conviction: You must maintain a level of confidence that surpasses the average person and remain steadfast over time.

While these traits sound simple, they are incredibly difficult to practice. Most retail investors lack at least one of these qualities.

Diamond hands are rare because they require not only a high level of insight but also immense emotional resilience. The harsh truth is that most ordinary people lack these traits and should not force themselves into this role.

If you can’t endure the sacrifices required to become a diamond hand, you shouldn’t attempt it. Many who succeed endure unimaginable hardships—something others often fail to see.

3. The Trap of Short-Term FOMO: The Roller Coaster You Can't Escape

If becoming a diamond hand is unlikely for most, what about achieving success through short-term FOMO trading? The answer is still no.

Short-term FOMO presents a unique set of challenges:

  • Everyone else is making 10x gains in a day—should you join?
  • They’re all buying—should you FOMO in too?
  • You sell for a 20% profit but miss out on a 100x rally.
  • You buy into a hyped meme coin only to get trapped.

These scenarios repeat daily during market mania, leading from excitement to regret, losses, and eventual exit.

The issue lies in the nature of FOMO trades: while they offer high payouts, their success rates are often low. Only in cases of broad-market rallies or selective asset pumps does FOMO trading work. Even then, you need three qualities to succeed:

  • Early entry: Spot the opportunity before the masses.
  • Quick exit: Recognize and act on risks before greed takes over.
  • Self-control: Avoid overtrading and manage risks effectively.

Possessing all three traits is rare, making short-term FOMO a high-risk, low-reward strategy for most retail traders.

4. This Time Will Be Different? Today's Costs, Tomorrow's Price

When considering both diamond hands and short-term FOMO, the odds of ultimate victory for the average investor remain low. Some may argue that favorable conditions, like bullish policies or endless market rallies, could lead to success. However, history has shown that no bull market lasts forever, and no bear market is eternal—cycles will always prevail.

For most people, the key is to pursue low-difficulty investments rather than chasing high-stakes strategies. This doesn’t mean giving up but rather making informed choices that align with your circumstances and capabilities.

The dream of wealth is hard to replicate, but failure often stems from the same reasons: overconfidence, lack of planning, and ignoring risks.

Invest within your means, understand your limitations, and focus on what you do best. Success is not just about winning big; sometimes, it’s about losing less.

As we stand on the brink of a new bull market, whatever path you choose, I sincerely hope this time, you will win.

This article was sourced from Foresight News: 

https://foresightnews.pro/article/detail/72048

AIC Team

2024/12/2