Content
- Pros and cons of the HODL strategy
- “HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo.
- What does ‘HODL’ mean in crypto?
- Does it make sense to HODL?
- HODLING as a Strategy and Guiding Philosophy
- The history of HODL
- Understanding HODL: An Overview of the Top Crypto Trading Strategy
- What is Coinbase and how does it work?
- HODL: The Cryptocurrency Strategy of “Hold on for Dear Life” Explained
- Why do people in crypto love to HODL their coins?
- FUD
The crypto market crashes that happened in 2018 and 2020 are perfect case studies that support the HODL investing strategy. In December 2017, the price of Bitcoin reached $19,700, but by November 2018 Bitcoin fell to a low of $5,500. Then, from 2018 to middle 2020 the price of Bitcoin (more or less) stayed below $10,000, and rarely broke the $10,000 mark. However, by summer 2020 a bull market began and Bitcoin saw its price go from $10,000 in June to $60,000 by April 2021. It went parabolic, and as a result some day traders made money, but also many people lost out on the action (not the HODLers).
- Our experts have been helping you master your money for over four decades.
- It is important to know when the right time is because this metric varies from one individual to another.
- Compared to buying and holding, market timing needs a lot more skills and expertise, meaning beginners have a disadvantage with this strategy as opposed to value investment.
- The HODL strategy is about holding assets over the long term, which means that cryptocurrency investors don’t have to be concerned about timing the market.
- Therefore, traders interested in crypto need to carefully understand what they’re investing in with crypto.
It doesn’t matter which cryptocurrency is in your portfolio, as long as you hold it for a few years (or more) before selling. The misspelled “HODL” quickly circulated among the crypto community, and soon after turned into an internet slang to indicate when a person holds bitcoin rather than selling it. Use of the term was later extended to include other cryptocurrencies.
Pros and cons of the HODL strategy
Crypto is still relatively new, so we can’t look back over time and see how the HODL strategy has performed. Although buy-and-hold may be an effective approach when it comes to investing in stocks, we still don’t know if it works for digital assets. It’s important to consider cryptocurrency volatility in your investment decisions.
- These schemes are often orchestrated through apps like Slack or Telegram, he adds, and advises curious chatroom readers to beware of such gimmicks.
- HODL is a term used in the cryptocurrency world to describe a buy-and-hold investing strategy.
- The term almost immediately became a meme via social media, and the misspelling continues to live on in internet message forums such as the infamous Wall Street Bets board on Reddit.
- Hodling crypto only works with long-lived digital currencies that can build value over time.
This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy. “HODL” originated as a misspelling of “HOLD” (written in all caps), in an online post by an early Bitcoin investor. But “HODL”, as it has gained popularity among crypto enthusiasts, has come to mean “hold on for dear life”. Crypto HODLers, like buy-and-hold stock investors, pride themselves on “holding on” by not selling their cryptocurrency, no matter what happens in the crypto markets. In contrast, other investors choose to time the market, which leads them to make short-term decisions or trades. Compared to buying and holding, market timing needs a lot more skills and expertise, meaning beginners have a disadvantage with this strategy as opposed to value investment.
“HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo.
The HODL token may seem like an attractive source of passive income, but the price of a HODL token is down more than 99% from its all-time high. A 10% tax is applied to each HODL transaction, and the tax is automatically liquified and converted to BNB (BNB). That BNB is then transferred to a reward pool and is distributed every seven days to investors who hold HODL tokens in their wallets. Even billionaire investor Ray Dalio said he was wrong about 66% of the time he personally disagreed with the “buy and sell” decisions of his hedge fund’s automated quantitative investing process. The “Oracle of Omaha” famously encouraged investors never to own a stock for 10 minutes that they wouldn’t be comfortable holding for 10 years.
- It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such.
- While Wall Street executives make long-term investments and Wall Street Bets traders have diamond hands.
- Instead of buying low to sell high, i.e., timing the market, he would start HODLing onto his currency and not selling.
- Even if HODLing doesn’t seem right to you, there’s still lessons to be learned from this approach.
Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. The HODL strategy, also known as buy-and-hold, involves buying an asset and holding onto it, even if the market becomes unstable. HODLing is based on the idea that, historically speaking, the market will ultimately trend upward.
What does ‘HODL’ mean in crypto?
The cryptocurrency world is full of exciting and interesting eccentricities, including the lingo. Hopefully, by going through this article, you have familiarized yourself with some of the more common unique terminologies used within the blockchain space. The term ‘flippening’ is used within the crypto circles to refer to a hypothetical moment in which the market capitalization of Ethereum surpasses that of Bitcoin. The latter is the oldest and largest cryptocurrency by network value and Ethereum’s market cap has trailed Bitcoin’s for several years. In crypto, the comparable strategy to value investment would be ‘HODLing,’ which works the same way. An investor identifies a project with great potential and invests in it for the medium to long term.
- The rewards are generated from taxes collected on transactions made by users, such as sale, purchase, or transfer of HODL tokens.
- It went parabolic, and as a result some day traders made money, but also many people lost out on the action (not the HODLers).
- It refers to a situation when a crypto investor has encountered a massive loss by being on the wrong side of a trade.
- I’LL TELL YOU WHY,” their message read (this time spelling “hold” correctly).
It may strike you as a misspelling, and you will be right, but within the blockchain space, that spelling is correct. With all the attention, jargon that was once just used for inside jokes in early cryptocurrency chat rooms and on Reddit threads has now become a part of the dialogue. The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site.
Does it make sense to HODL?
For those who invest in cryptocurrency, HODL has become a banner proclaiming their long-term allegiance to digital currency. These terms stand in contrast to “paper hands,” those who are willing to sell when volatility ratchets higher. The best time to HODL a cryptocurrency is often subjective and depends on various factors, including market conditions, particular cryptocurrencies, and individual financial goals.
- Some say you should HODL until your coin is worth a sum that you’re happy with and then sell and take the profits.
- When you buy and hold, you don’t have to worry about market volatility, or watch for every movement in the market to time your sales.
- Typically used by Bitcoin maximalists, a HODLing strategy is similar to the conventional buy-and-hold investing strategy.
- In crypto, the term is used to refer to individuals or institutions with an outsized investment in a particular asset.
- Stock market investors often use the buy-and-hold approach for long-term investments, which is effectively the same as HODLing.
Similarly, you can hold a cryptocurrency for an indefinite length of time, through multiple price changes, because you believe that the coin will do well in the future. Based on these principles, the best time to HODL is now, always, and forever. A true believer would always hold on to their tokens, even if markets crash or become extremely volatile.
HODLING as a Strategy and Guiding Philosophy
It refers to a situation when a crypto investor has encountered a massive loss by being on the wrong side of a trade. As we have mentioned before, cryptocurrencies are highly volatile assets, and there is a high chance that a trader can lose their investment quickly. HODLing is an investment strategy derived from the traditional financial world where it is referred to as buy and hold.
The history of HODL
The main difference is that HODLing often involves the support of a community on a crypto forum, which encourages investors to wait out rough periods in the market. The buy-and-hold strategy, Hexn on the other hand, has no social component. Today, Bitcoin prices are also down 59% in 2022 as rising interest rates have triggered a sell-off in cryptocurrencies and other risk-on assets.
Understanding HODL: An Overview of the Top Crypto Trading Strategy
HODL, or “Hold On for Dear Life,” is now a widely known concept in the crypto community that refers to the strategy of not selling your digital assets, even amid extreme price changes in the market. And given Bitcoin’s latest bout of volatility, HODL remains relevant a decade later in 2023. It is used in the crypto ecosystem to refer to a strategy of holding onto bitcoin holdings through its various price fluctuations and volatility. The acronym is a misspelling of the word “holding” by a user on an online forum. Typically used by Bitcoin maximalists, a HODLing strategy is similar to the conventional buy-and-hold investing strategy. HODL may also refer to the HODL token on cryptocurrency exchange Binance’s Smart Chain.
What is Coinbase and how does it work?
Learn where the term came from and why it’s a useful approach for amateur traders. It’s essentially the opposite strategy from day traders trying to maximize their cryptocurrency profits on a short-term basis. JSI uses funds from your Treasury Account to purchase T-bills in increments of $100 “par value” (the T-bill’s value at maturity). The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability – yield is subject to change.
Given how volatile swings are when it comes to cryptocoins, the need to make a decision on HODLING occurs more frequently than with traditional stocks. This is because HODLING is a middle ground where you’re assuming things will work out, instead of putting more money into assets, or selling assets when part of you thinks they could be worth much more tomorrow. Despite the recent high rate of return and the reasons to invest, as mentioned above, prudent investors should also reckon with the risks of holding cryptocurrencies.
HODLing: A Buy-and-Hold Strategy
HODLing stocks can help investors avoid the instinct to pull out when the market is in decline. By holding stocks for the long term, investors can weather short-term market instability. The HODL strategy is about holding assets over the long term, which means that cryptocurrency investors don’t have to be concerned about timing the market.
HODL: The Cryptocurrency Strategy of “Hold on for Dear Life” Explained
Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Different countries and parties express different attitudes towards the use of cryptocurrencies. It can significantly hinder their role in supporting international transactions, affecting the value of cryptocurrencies. Unfavorable policy-making and public perspective might drag down the asset value for the long term. Long-term HODLers may use DCA strategies to add to their position, especially during bear markets.
Why do people in crypto love to HODL their coins?
When looking for what coins to invest in to HODL, traders and investors can first look at the specific cryptocurrency’s historical chart. Now that you’ve heard some of the arguments for and against the HODL strategy in cryptocurrency trading, you might be wondering whether it’s really worth it. After all, we know that cryptocurrency doesn’t have the same proven track record that the stock market has. The strategy of buying and holding an asset for a long period of time is hardly a new one, and its roots predate the invention of cryptocurrency. HODL is a term used in the cryptocurrency world to describe a buy-and-hold investing strategy. The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice.
People who HODL crypto must believe their preferred coins will gain widespread adoption (or at least have a net increase in value) while remaining calm amidst significant price swings. The cornerstone of HODL’s appeal is its simplicity—novice investors can understand how to HODL within a few minutes. While big-league investors have the knowledge and resources to capitalize on small price changes and volatility, amateurs are unlikely to predict trends and act on them in time to profit (or minimize losses). When HODLing, buyers research and purchase assets they’re confident in, then hold on to them. JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries.