A term used in the investing community to describe an investor's strong will to hold onto their investments, even in the face of significant price drops or volatility.
"Diamond Hands" or 💎🤲 is a term that originated from the meme-driven investing community. It metaphorically represents the absolute strongest hands; hands of the most resilient investors who are not easily swayed by market volatility. This imagery contrasts with "Paper Hands," which describes investors who sell at the first sign of a downturn. The diamond metaphor signifies both strength and value that forms under pressure.
An investor who bought Bitcoin at its peak in 2017 ($20,000) and held onto it through the crash down to $3,000 and back up to over $60,000 in 2021 can be said to have "Diamond Hands". Similarly, early Bitcoin Cash adopters who held through multiple market cycles demonstrated this same resilience.
Having "Diamond Hands" refers to an investor who holds onto an asset beyond where most wouldn't. These investors are typically well-financed and continue holding an asset through large price swings when others would secure gains or minimize losses. This strategy is often associated with a long-term investment perspective, and is particularly common in cryptocurrency markets where extreme volatility is normal. The strategy requires strong conviction in the fundamental value proposition of the asset.
During the GameStop stock surge in early 2021, many retail investors on Reddit's WallStreetBets forum claimed to have "Diamond Hands", indicating their intention to hold onto their shares despite extreme price volatility. Similarly, in the cryptocurrency world, long-term holders of Bitcoin Cash who believe in its utility as peer-to-peer electronic cash have maintained their positions through multiple market cycles.
The concept of "Diamond Hands" also reflects an investor's psychological strength and risk tolerance. It's a mindset that disregards short-term losses in favor of potential long-term gains. However, it's important to note that this strategy can lead to significant losses if the asset's price does not recover. Successful "Diamond Hand" investors typically have done thorough research and have strong conviction about the long-term viability of their investments rather than acting on blind faith.
An investor with "Diamond Hands" might hold onto a declining cryptocurrency like Bitcoin Cash during a bear market, believing in its technical fundamentals and utility for everyday transactions, while an investor with "Paper Hands" might sell the same asset to cut their losses. The psychological fortitude required to watch an investment drop 80% in value before eventually recovering represents the core of the Diamond Hands mentality.
"Diamond Hands" is a significant part of meme investing culture, particularly within online communities like Reddit's WallStreetBets and crypto-focused forums. It's often used to encourage collective action and discourage selling during periods of price decline. This cultural phenomenon has evolved into a badge of honor among certain investor communities, where holding through extreme volatility is celebrated and rewarded with social status.
During the cryptocurrency market downturns of 2018 and 2022, the phrase "Diamond Hands" was frequently used in social media posts to encourage investors to hold onto their assets rather than selling them. Bitcoin Cash communities often emphasize the importance of long-term holding while continuing to use the cryptocurrency for its intended purpose of daily transactions and commerce.
Historically, some of the most successful cryptocurrency investors have demonstrated "Diamond Hands" by holding through multiple market cycles. The strategy has precedent in traditional investing as well, where figures like Warren Buffett advocate buying and holding quality assets for decades rather than trading based on short-term market movements.
Those who held Bitcoin from its early days (when it was worth pennies) through multiple 80%+ drawdowns have seen returns in the millions of percent. Similarly, early adopters of Bitcoin Cash who maintained their holdings since the 2017 fork, while simultaneously using it for its intended purpose as electronic cash, have weathered significant volatility while supporting the network's growth and utility.
All terms and definitions may update as the Cryptionary improves.