In crypto, paper hands refers to investors who rush to sell their assets at the first sign of a price fluctuation. These investors lack the risk tolerance to hold through downturns and are prone to panic selling. The term originated in traditional stock trading but has become widely popular in crypto communities.

Investors with paper hands often exit their positions prematurely, missing potential rebounds and long-term gains. This behavior can cause sudden sell-offs, further accelerating price declines. It is often used in contrast to diamond hands. Understanding paper hands and the meaning behind the term is crucial for both new and experienced traders to navigate the emotional challenges of crypto investing.