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HODL: The Cryptocurrency Strategy of “Hold on for Dear Life” Explained

21 فروردین, 1402 بدون دیدگاه

The idea is to purchase stocks and hold onto them for a long period, regardless of market fluctuations. Cryptocurrency is a type of digital currency supported by blockchain technology. It functions as a medium of exchange and can also be held as an asset or investment.

  1. 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.
  2. In contrast, other investors choose to time the market, which leads them to make short-term decisions or trades.
  3. The acronym is a misspelling of the word “holding” by a user on an online forum.
  4. A good strategy, Morrison says, is to have a strong idea of why you’re investing in something when you buy it.
  5. This has been particularly the case for maximalists who see Bitcoin, as well as the wider blockchain as being the heir apparent to current financial and economic infrastructure.

HODL means holding on to an investment position no matter how volatile the price action gets. It is a rallying cry by the blockchain community encouraging the weak hands to hold on to their positions whenever the price rises to stratospheric heights or starts plummeting down to earth. HODLing is an investment strategy derived from the traditional financial world where it is referred to as buy and hold. There is no difference between HODLing a cryptocurrency and a buy-and-hold strategy.

You can HODL a stock through its volatility because you believe in the company’s future success. 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. 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.

Otherwise, you may be Hodling an asset that may never recover, after such a huge dent in its reputation. The term hodling has also become a meme, with crypto enthusiasts using this in conjunction with popular cultural references, to help captivate a wider audience of hodlers. In other words, market timing is difficult and risky, and making the wrong moves will lock in paper losses that may otherwise disappear over time. So you buy, you hold on for dear life — hodl — and you build wealth in the long haul. The fall was possibly a result of a ban of third-party payment companies from working with Bitcoin exchanges from China’s central bank (People’s Bank of China). The author loaded the post with typos and upper cases to express his firmness in his simple holding strategy.

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. 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. We believe everyone should be able to make financial decisions with confidence.

Crypto hodl vs. trading

The idea is that the value of the stocks would have risen considerably within this period. HODL may also refer to a DeFI token on the Binance Smart Chain (BSC). Much like the term itself, HODL encourages users to hold onto their tokens for rewards in the Binance coin (BNB) that are distributed every three days. The rewards are generated from taxes collected on transactions made by users, such as sale, purchase, or transfer of HODL tokens. The tax amount is converted into BNB tokens and a percentage of the gains is redistributed back to users from the collective liquidity pool. In the post, the user misspelled “Hold” as “HODL” while expressing his intention to hold Bitcoin despite the volatility in the market.

The term “HODL” first appeared in an online cryptocurrency forum in 2013 as a misspelling of the word “hold” — a typo that readers quickly embraced. 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.

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. This typo quickly caught on within the forum and then spread across the wider crypto community. Since then, it has been adopted by crypto traders and investors as an acronym for ‘Hold On for Dear Life,’ representing a steadfast approach to holding cryptocurrencies amidst market fluctuations. However, whether it’s a good strategy or not depends largely on the individual’s risk tolerance, investment goals, and the specific cryptocurrencies they are investing in. Like all investment strategies, HODLing has its risks, including the potential for significant losses due to the market volatility of cryptocurrencies. It’s important to conduct thorough research and consider seeking financial advice before making any investment decision.

It’s based on the belief that over time, the value of cryptocurrencies will increase despite short-term price swings, a view held by many crypto traders. It’s been an interesting journey, one that’s taught me a lot about the value of patience in investing. As a firm believer in the HODL strategy, I apply it to my own investments. Hodling can be a good strategy for traders who do not want the day-to-day volatility of the market and have little time to make fast trading decisions. Like the example of Laszlo’s short-term view of buying pizza shows, these rash decisions can be very costly in the long term.

It’s worth noting that ‘market timing’ — the act of trying to predict future price movements — is notoriously difficult and risky, even for seasoned investors. Satoshi Nakamoto, the creator of Bitcoin, designed it as a medium of exchange and a store of value, suggesting a long-term use case. Therefore, many investors view any time as a good time to HODL as long as it aligns with their personal investment strategies and risk tolerance. 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.

Can You HODL Stocks?

Our estimates are based on past market performance, and past performance is not a guarantee of future performance. If you do not want to actively manage your positions and want to wait for more significant long-term gains, then yes it is better than trading. ”, and in the market, many often use this when trying to emphasize their commitment to long-term investment in crypto.

Also, you’ll get to discover ten other common phrases to use in blockchain forums and chat groups. Cryptocurrency and blockchain technology are still relatively untested, and they may not pan out as the revolutionary innovation their supporters envision. There are also times when it may be prudent to sell, such as cashing out some gains when you’ve met your goals. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.

Can you HODL in the stock market?

The price of Bitcoin began another surge in mid-2017 and reached a historic high of $19,167 at year-end. However, the price fell again after the 2017 surge; it hiked again during the COVID-19 pandemic and hit a new high of over $58,000 in early 2021. The price surged from $15 in January of said year to over $1,100 at the beginning of December, which delivered a return of 7,230%. With a high-volatility nature, the price fell from $716 by 39% to $438 in mid-December.

HODL ($HODL) is a cryptocurrency that was named based on the popularity of “HODL” as an expression in the crypto community. The HODL token operates using the Binance Smart Chain, and HODL token owners can earn Binance Coin rewards. The information on this website is for educational purposes only, and investing carries risks. Always do your research before agile team facilitation icp-atf training course investing, and be prepared for potential losses. To be an active trader, you will likely be aware of technical analysis and also follow the current fundamental events that may impact your trading. Ultimately, it is important to know that active trading will require you to invest not just money, but also a significant amount of time, to be successful.

The idea is to discourage selling at the top, which could possibly trigger a reversal of the asset’s price. Instead of buying low to sell high, i.e., timing the market, he would start HODLing onto his currency and not selling. “In a zero-sum game such as this, traders can only take your money if you sell,” he wrote. At the time, the flagship cryptocurrency had lost 50% of its value in two weeks falling how to buy veritaseum 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. Continue reading to learn more about how it came to be, why it is considered an investment strategy, and other words that you may want to be acquainted with if you wish to be a part of the community.

Come back in five years, and you’ll find that some of today’s hottest cryptos never quite made it to the moon, and that diamond-hand hodlers lost a lot of money. There are thousands of cryptocurrencies on the market today, how to buy bitcoin with cash in the uk and the number of long-term winners in that group is much smaller. Some cryptocurrencies are jokes, others are money-making frauds, and another group has all the right intentions but flawed technical designs.

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