What does HODL mean in crypto?

Depending on your investment strategy and risk profile, HODLing can be a good approach. However, crypto markets are highly unstable and there is no guarantee that HODLing will be successful. Even if HODLing doesn’t seem right to you, there’s still lessons to be learned from this approach. HODLers are a social bunch—their strategy relies on support from other investors, who urge them along and convince them not to sell if they are feeling unsure.

In such a situation, any more selling could lead to further price correction and the best action for the long-term investors is to discourage weak hands from letting go and thereby mitigating further losses.
It can be difficult for even professional traders to time short-term trades.
Some crypto traders choose to use other approaches, like SPEDN or BUIDL.
It’s important to consider cryptocurrency volatility in your investment decisions.
HODLing is often seen as a simple and effective strategy, especially for those who prefer to avoid the stress of daily trading.

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.

What is the difference between HODL and a buy-and-hold strategy?

However, while “HODLing” might be a good strategy, it doesn’t tell you what to own. Buying and holding a poor investment can lead to years of bad returns, if not a total loss on the investment. 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. Here’s the origin of HODL and why it can be a valuable investing strategy. Bankrate.com is an independent, advertising-supported publisher and comparison service.

In reality, you’re better off selling some cryptos before they burn too much of your money.
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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.
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.
Saving is all well and good, but can you imagine being able to save and at the same time earn a profit for it?
HODLing is a sound investment strategy that has been successfully applied even within the traditional markets; however, its efficacy depends on the investor’s goals.

HODLing is often seen as a simple and effective strategy, especially for those who prefer to avoid the stress of daily trading. 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. The term HODL was born from a post titled ‘I AM HODLING,’ made by a member named GameKyuubi, on the famous Bitcoin forum Bitcointalk in December 2013.

What is hodl in the crypto world and its advantages

Because HODLing requires a long-term commitment, many investors use cold storage devices, such as hardware wallets, for security. Cold wallets keep a user’s private Hexn keys offline so their assets are not easily hacked or stolen. Even high-quality hot wallets are generally more vulnerable to hacks than cold wallets.

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Rather than trying to time the market, this strategy simply operates under the assumption that the asset’s price will increase over time.
An investor identifies a project with great potential and invests in it for the medium to long term.
The term HODL has also inspired the creation of a similar term often, BUIDL, which is commonly used by the cryptocurrency community to refer to the many kinds of applications that are being built within the blockchain industry.

As with many other popular memes, the origin of HODL can reportedly be traced back to a typo. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.

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The Ultimate Guide To Keeping Your Crypto Secure

It’s also commonly come to stand for „hold on for dear life“ among crypto investors. In early bitcoin forums, someone posted a message that spelled the word „hold“ wrong, and readers interpreted it as an acronym „hold on for dear life,“ Saddington explains. „Now, it’s become a meme of sorts, so that when the prices are highly volatile, bitcoin buyers say ‘HODL!'“ Saddington describes himself as „a long-term HODLER.“ 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.

Related Terms

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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.

HODL Culture

Under the post-COVID low-interest context with inflation expectation, investors also hold cryptocurrencies for value reserve. The term ‘HODL’ originated from a post in a Bitcoin forum, where the user accidentally typed ‘hodl’ instead of ‘hold’ during a discussion about trading strategies. The user referred to themselves as an ‘illusioned noob’ who was poor at trading, thus choosing to ‘hodl’ during a period of high price volatility. Yes, the principle of HODLing can also be applied to the stock market. It’s similar to the buy-and-hold strategies used by many stock market investors. The idea is to purchase stocks and hold onto them for a long period, regardless of market fluctuations.

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. Because it’s a relatively new and rapidly growing market, prices are constantly shifting. To protect your investments, it’s essential to know the ins and outs of your strategy of choice before making a purchase. Overall, HODL best suits investors with a multi-year vision for their preferred crypto projects.

The HODLer History

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Your decision: Is HODL for you?

It is important to know when the right time is because this metric varies from one individual to another. The right time to sell will largely depend on the goals of investing. If these goals are achieved, the coin holder can sell at any price in the market; otherwise, they continue to HODL. HODLing campaigns are also witnessed whenever the price of an asset starts falling. In such a situation, any more selling could lead to further price correction and the best action for the long-term investors is to discourage weak hands from letting go and thereby mitigating further losses.

However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. Ben Gagnon, chief mining officer for Bitfarms (BITF), says HODL is more of a mentality than an investing strategy. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.

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