Bagholding is the end state of sunk-cost-fallacy and loss-aversion. The trader has stopped managing the trade and started hoping.
It is common after pump-and-dumps and blow-off-tops, where late buyers are left with a stock that may never recover.
Example: buying a meme stock at $80 during a squeeze and still holding at $12 two years later, waiting to get back to even.
Related: sunk-cost-fallacy, loss-aversion, pump-and-dump, diamond-hands