A Beginner’s Guide To HODLing Crypto

ncs_collector

Aug 17, 2023

Working with the best crypto exchanges or apps can help you earn the most income from your crypto positions. HODL has become a viral meme in the cryptocurrency industry and has achieved mainstream popularity. Different mainstream media outlets, like The Washington Post and CNBC, have covered the meaning of HODL and the underlying investment strategy of crypto maximalists.

Pros and cons of the HODL strategy

To understand and be part of conversations within crypto enthusiast circles, you need to know the community’s lingo. In this guide, we will explain what is ‘HODL,’ which is one of the most prominent terms used by cryptocurrency investors. Also, you’ll get to discover ten other common phrases to use in blockchain forums and chat groups. Cryptocurrencies continue to gain more attention as an investment opportunity due to the remarkable breakouts in 2017 and 2020. The trend of financial decentralization and currency digitalization provides room for growth to cryptocurrencies.

Understanding the HODL strategy

Access and download collection of free Templates to help power your productivity and performance. It’s been demonstrated that the post’s author made the correct decision. 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.

HODL = HOLD

Most investors are likely to experience emotions of FOMO at least once in their investing career, usually a lot more than that. Fear Of Missing Out is a common problem in today’s society, being especially rife in the cryptocurrency world. With such large volatility and speculation all around you, FOMO cannot help but start to sink in. HODLing is a long-term strategy which requires patience and consistency, avoiding FOMO can be key to many beginners in the crypto world. The cryptocurrency scene is still extremely new and most see lots of potential still to come, but this does not mean that all coins and tokens will continually increase in price. For HODLers, this may be bad news, as many newcomers in the market may assume every investment has a massive 100x potential, but that simply isn’t the case.

Believe Crypto Is The Future? Then Buy And Hold Until The Future Gets Here

And when you’re tempted to sell it, a key question is whether something about your analysis has changed. “HODL can be employed, particularly when the market is declining, to assist investors in avoiding the urge to sell in a panic,” Porter says. Ben Gagnon, chief mining officer for Bitfarms, says HODL is more of a mentality than an investing strategy.

The term ‘HODL’ was first used by a BitcoinTalk forum member going by the pseudonym GameKyuubi on December 18th, 2013. GameKyuubi wrote a post to the forum titled “I AM HODLING” and proceeded to pen a semi-intelligible post attempting to explain his new investment strategy while (admittedly) intoxicated. 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.

However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. Value investors rely on fundamental metrics like price-to-book, price-to-earnings and price-to-sales ratios to estimate the intrinsic value of a stock. There’s no question the HODL strategy has paid off well for GameKyuubi and other Bitcoin investors that have held onto their crypto investments.

Long-term investment also has a risk, but investors cannot ignore the upward tendency. If they had bought 500 USD worth of Bitcoin in 2011, today they would have between 3.7 and over four million dollars, depending on the specific date of purchase and the transaction. HODLing is a buy-and-hold strategy that may only be for some, despite the benefits. It appeals to those who have intense faith in the future of cryptocurrencies and a long-term investing perspective. Key tactics during a market downturn are maintaining composure and not losing control. The option to HODL or not to HODL should be linked with your specific financial circumstances and ambitions in the ever-changing world of cryptocurrencies.

The idea behind this strategy is to encourage users to contribute to the development of cryptocurrency infrastructure, which will ideally may raise the value of digital currencies. Its important to consider cryptocurrency volatility in your investment decisions. Crypto forums may preach the benefits of HODLing, but there isnt definitive proof that it works for crypto investments in the same way it has traditionally worked for the stock market. HODLing is a sound investment strategy that has been successfully applied even within the traditional markets.

To always buy and never sell, even when the price of crypto is dropping, does not seem to be a good investment.
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Just like HODL, BTD or BTFD is a term used to encourage more investment whenever an asset’s price corrects during a rally, i.e., it dips.

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. In that case, investors buy when prices are low, hold an asset while the value increases, then try to sell it before the price dips. Even if HODLing doesnt seem right to you, theres still lessons to be learned from this approach. HODLers are a social bunchtheir strategy relies on support from other investors, who urge them along and convince them not to sell if they are feeling unsure.

“HODL” is a term that is often used in the Bitcoin investment community. It is not only a popular term but is also considered an investment strategy. “HODL” is a cryptocurrency-related slang that stands for the word “hold” misspelled. It often refers to retaining crypto assets that you own for an extended period, even throughout a highly volatile market movement. “Hodl” is meant to encourage people to not impulsively sell when a cryptocurrency drops dramatically or rises to become highly profitable to sell.

The meme also acknowledges novice crypto investors that they are not skilled enough to profit from short-term trades amid the notoriously volatile crypto market. However, when discussing why people HODL we must look at how to HODL for a beginner in the crypto and digital asset space. To always buy and never sell, even when the price of crypto is dropping, does not seem to be a good investment. Because users are not buying to sell in the short term where margin profits are low and risks are high.

The legendary volatility of cryptocurrency is due to the fact that it’s driven entirely by sentiment, since no hard assets or cash flow back cryptocurrencies (with the exception of stablecoins). Many crypto coins, maybe even most of the 20,000 or so in existence, may end up worthless. 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 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.

And then there are “whales,” which are simply crypto investors that have massive crypto holdings. There is often a lot of talk and speculation about whales manipulating the market for their own gains. This includes things like putting up buy walls at certain prices to prevent people selling above that price. Treasury Accounts.Investing services in treasury accounts offering 6 month US Treasury Bills on the Public platform are through Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. See JSI’s FINRA BrokerCheck and Form CRS for further information.JSI uses funds from your Treasury Account to purchase T-bills in increments of $100 “par value” (the T-bill’s value at maturity).

What started as a typo in an online forum has developed a real meaning of its own. 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. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click https://cryptolisting.org/ to take an action on their website. Wayne Duggan has a decade of experience covering breaking market news and providing analysis and commentary related to popular stocks. News & World Report and a regular contributor for Forbes Advisor and USA Today. 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.

Ratings are not recommendations to purchase, hold, or sell securities, and they do not address the market value of securities or their suitability for investment purposes. HODL is a misspelling of hold and an acronym for hold on for dear life. It refers to an investing strategy where you buy crypto with the goal of holding onto it for the long haul, regardless of market conditions. Crypto markets are highly volatile, which means that investors often find themselves second-guessing their decisions. HODL is an investing strategy in which individuals purchase cryptocurrencies and hold them for a long period of time. This allows investors to take advantage of an increase in the value of the asset.

Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment. The HODL approach has been rewarding for long-term investors in Bitcoin, Ethereum (ETH) and other leading cryptocurrencies, as it’s helped them navigate extreme fluctuations in the crypto market. In no time, the term HODL spread like wildfire throughout the crypto world. Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade. 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.