The phrase “holding the bag” comes from old slang, originally used to describe someone left with worthless goods after everyone else had escaped with value. In the context of crypto, it refers to investors who continue holding a coin or token that has lost most of its value, often because they bought in at or near the top of a price rally. When the hype fades and others sell to cut losses, those who refuse to sell are left “holding the bag” of a nearly worthless asset.

The term captures both the financial and emotional sides of investing. Bagholders often hold on due to denial, hope of recovery, or fear of realising a loss. In many cases, this behaviour is driven by psychological biases such as loss aversion, where the pain of selling at a loss feels worse than the possibility of further decline. Some also cling to optimism fueled by community hype or unrealistic recovery expectations.

In crypto markets, where prices are volatile and projects can collapse quickly, bagholding is especially common. Pump-and-dump schemes, sudden crashes, or overhyped coins often create large numbers of bagholders. The phrase is used as a cautionary reminder to manage risk, avoid emotional decisions, and recognise when it’s wiser to exit a losing trade than to hold on indefinitely.