The author admitted to being a ‘bad trader’ and decided to hold onto his Bitcoin investment regardless of the bear market, thus becoming one of the earliest Bitcoin investors to promote this strategy. HODLing is simple to understand, but it requires a lot of patience, discipline, and conviction. Suppose a buyer isn’t fully convinced about the future of their coins. In that case, it’s challenging to HODL through market downturns—particularly because cryptocurrencies are among the most volatile and speculative asset classes.
“To HODL is an acknowledgment that while a lot of money can be made trading short-term volatility, a lot of money can also be easily lost,” Gagnon says. A good strategy, Morrison says, is to have a strong idea of why you’re investing in something when you buy it. And when you’re hexn.io tempted to sell it, a key question is whether something about your analysis has changed. The devotion among HODLers comes from the culture surrounding Bitcoin and other cryptocurrencies, says David Duong, head of institutional research at the cryptocurrency exchange Coinbase.
Some investors choose to HODL after buying during price drops, while others continuously invest over time, a strategy known as dollar-cost averaging. While some HODLers store their virtual currencies on centralized crypto exchanges (platforms for buying and selling cryptocurrency), many prefer to move their assets to self-custodial hardware wallets. A self-custodial wallet is strictly managed by the wallet holder, meaning there’s no centralized intermediary between the trader and their crypto. Keeping assets in a “cold” hardware wallet, like a USB drive, prevents hacking and theft— and unlike a centralized exchange, it’s completely offline. Although hardware wallets are less convenient to use, HODLers are hanging on to their assets for years, so they only have to worry about keeping the device safe until it’s time to sell.
Digital currency is notoriously volatile, and those who try to time the price swings may find themselves buying high and selling low — gradually or quickly eating away at their capital. The term quickly caught on, and soon, other investors in the crypto community started using ‘HODL’ to represent a long-term investment strategy, emphasizing belief in the future of digital currency. HODLing means resisting the urge to sell your digital assets, even when the crypto markets are notoriously volatile. It’s an approach that prioritizes long-term gains over short-term trades. If you’re interested in staking while you HODL, read through your cryptocurrency’s rules before depositing your funds. Be sure you know how long it takes to withdraw your digital assets and research the track record for each validator pool.
An affiliate of Public may be “testing the waters” and considering making an offering of securities under Tier 2 of Regulation A. No money or other consideration is being solicited and, if sent in response, will not be accepted. No offer to buy securities can be accepted, and no part of the purchase price can be received, until an offering statement filed with the SEC has been qualified by the SEC. An indication of interest to purchase securities involves no obligation or commitment of any kind. Although the term “HODL” originated in the crypto community, stock market investors have been HODLing for a long time. You can HODL any stock you own, but it’s usually best to avoid HODLing risky stocks. There are a host of stock market myths out there and just like any other investment including crypto, the stock market also goes through bull and bear periods.
At the time, the flagship cryptocurrency had lost 50% of its value in two weeks falling from a then all-time high of $1,120 to a low of $560 between December 4th and the 18th. GameKyuubi wrote his post on the 18th, attempting to communicate that he was changing tact to his Bitcoin investment. It is, however, more difficult to engage in market timing strategies in crypto where price volatility is high.
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In crypto, the term is used to refer to individuals or institutions with an outsized investment in a particular asset. Mooning is a related term to ‘When Lambo’ that also refers to stratospheric price rallies. If the price of an asset rises very fast, the community equates that rise to a ride on a rocket to the moon which gave rise to the phrase going to the moon or ‘mooning,’ for short. Trying to beat the market by timing reversals is an expert’s game, and most newcomers to crypto are not experienced at doing that. HODLing thus becomes a safe play for such individuals and institutions looking for long-term gains rather than gaming the system. In the case of Bitcoin, if you’d purchased and HODLed your coins from the start, your profits would be unprecedented.
“HODLers” buy assets and keep them with the expectation that years down the road, they’ll be worth significantly more than they are today. It’s a healthy part of a sensible cryptocurrency investing strategy when combined with serious research into the quality and long-term prospects of your cryptocurrencies. Most of us will do better with a well-researched hodling portfolio than a short-sighted day trading approach. All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns. You should consult your legal, tax, or financial advisors before making any financial decisions.
It’s impossible to argue that long-term Bitcoin HODLers have not done well. Since its debut in 2009, Bitcoin’s value has climbed from just pennies to more than $60,000 at one point. So, a long-term buy-and-hold approach would have returned traders many times their initial investment, because the strategy prevented them from selling when things got tough. Whether you’re new to crypto or a seasoned investor, it’s important to make informed decisions about strategy—and that means knowing your options. Anyone interested in crypto’s future should understand what HODL means.
For cryptocurrency maximalists, HODL represents more than a strategy for reigning in FOMO (Fear of Missing Out), FUD (Fear, Uncertainty, and Doubt), and other profit-eroding emotions. Long-term crypto HODLers stay invested because they believe that cryptocurrencies will eventually replace government-issued fiat currencies as the basis of all economic structures. Should that occur, then the exchange rates between cryptocurrencies and fiat money would become irrelevant to crypto holders. FUD is another acronym that stands for ‘Fear, Uncertainty, and Doubt.’ Part of the reason why cryptocurrency markets are so volatile is that they are vulnerable to public perceptions. Whenever there is negative press coverage, the value of the entire market will fall and the reverse is true.
Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. The above content provided and paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such.
News & World Report, Seeking Alpha, InvestorPlace.com and The Motley Fool. Mr. Duggan is a graduate of the Massachusetts Institute of Technology and resides in Biloxi, Mississippi. The investor sentiment cycle is a visual representation of the emotions a typical investor experiences based on the performance of the investor’s portfolio over time. Several altcoins that soared during the 2021 crypto boom, such as Dogecoin (DOGE), Avalanche (AVAX) and XRP (XRP), are down more than 88% from their all-time highs. Bitcoin’s extreme volatility has produced a handful of horrendous annual returns throughout the years. For example, Bitcoin shed 50% of its value in less than 48 hours of the Covid-19 pandemic-induced sell-off in March 2020.
The new definition helped illustrate the gist of HODLing to the masses. It takes a lot of emotional strength not to sell a plummeting asset, hoping that it will revert to greater heights. The term HODL, which has been in use for a few years, is the article’s main point of emphasis.
Investors who use DCA regularly buy small amounts of their preferred crypto assets over a long period. Some people purchase crypto at regular intervals (e.g., weekly), while others buy coins whenever they fall by a preset percentage (e.g., every 10% drop in a 24-hour window). In either case, the goal of DCA is to lower an investor’s average cost per coin. However, most HODLers keep their crypto for a minimum of a few years before selling. People who believe cryptocurrencies like Bitcoin will become mainstream currencies may never sell their portfolios, opting to keep their assets until they can spend them like fiat currency. HODLing means buying cryptocurrency and holding on to it long-term.
There’s little sense in earning a 10% annual percentage yield if a coin’s price plummets by 25%. Dozens of high-profile blockchains now use a Proof-of-Stake (PoS) consensus mechanism to validate transactions. On these chains, anyone can lock (“stake”) their coins to earn a percentage-rate reward over time for their help securing the network. Staking on blockchains like Ethereum, Solana, or Polygon earns passive income with minimal effort. What started as a typo in an online forum has developed a real meaning of its own.
It is the kind of mindset that will help you learn and contribute more positively to the community. Since large is a relative term, a more acceptable definition of a whale is anyone whose singular actions are able to affect the price of an asset. Individuals who participate in shilling often have a stake in the asset, and by drumming up support for the project behind the asset, they are trying to build up buying pressure which could lead to a price gain.
Still, if Bitcoin bulls are correct and BTC eventually becomes the world’s universal digital currency and preferred long-term store of value, long-term HODL’ers will benefit. “HODL can be employed, particularly when the market is declining, to assist investors in avoiding the urge to sell in a panic,” Porter says. Harry Turner, founder of The Sovereign Investor, says the key to Bitcoin’s long-term investing outlook is its leading market position and its fixed supply. Value investors rely on fundamental metrics like price-to-book (P/B), price-to-earnings (P/E) and price-to-sales (P/S) ratios to estimate the intrinsic value of a stock.
It’s important to state that debating whether or not a HODL strategy is worth it when investing in cryptocurrency is entirely different from the question of whether to invest in cryptocurrency at all. Cryptocurrency is still relatively new and isn’t subject to the same regulation as traditional investing. As with any investment, you should make sure you understand cryptocurrency before you begin investing. Buy-and-hold investing occurs when individuals purchase an asset—often stock—and hold it for a period of many years. Rather than trying to time the market, this strategy simply operates under the assumption that the asset’s price will increase over time.