Diamond Hands

Intermediate

Diamond hands is an expression that originated in online investor communities on platforms like Reddit and Twitter. It refers to holding a financial asset and not selling it, regardless of its volatility. Typically, the assets held with diamond hands are highly volatile, such as crypto, options, futures positions, and meme stocks. The term is a reference to diamonds being one the hardest and most resistant natural materials.
If the price of the asset increases, someone with diamond hands doesn’t sell it just to make quick gains. They expect it to rise even further in the future. If the price dramatically drops, the investor has trust in the asset bouncing back at some point and doesn’t want to lock in losses hastily.
An investor could say they have diamond hands when their asset’s price has fallen 50% and they still haven’t sold. There is, in a way, an element of irony in that having diamond hands is almost always high-risk. It’s certainly not a recommended way to manage your portfolio, and people often use the meme to light-hearten heavy losses. Besides saying they have diamond hands, investors also post various images illustrating the reference.
The term emerged as diamonds are one of the toughest materials out there, and users need to hold their assets, a term used commonly by traditional investors. Holding is already the root of the popular term HODL. This crypto-specific slang also means to maintain your position and avoid selling.
Using diamond hands is still mostly limited to digital asset users. However, it’s started entering mainstream financial vernacular with the rise of the meme stock movement. Related to diamond hands is the term paper hands. Having paper hands is the act of selling your assets as soon as the price begins to dip or rise.

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