HODL Overview, History, Benefits and Risks of HODLING

This form of ledger technology is what’s behind cryptocurrencies and other tech trends. Avoiding the urge to give in to fear, uncertainty, and doubt (FUD) is one of the hardest barriers to overcome. HODLing forces you to think about the long-term benefits of your strategy.

  • HODLing might not be the best strategy if the investor is looking for short-term gains.
  • They must have sufficient capital capacity to avoid forced sales or meet unexpected liquidity needs.
  • There are HODL memes, HODL forums, and even HODL T-shirts, but the term is more than a punchline.
  • The original crypto plunged to $4,000 before ending the year around $29,000.

Disclaimer – Information found on our website is not a recommendation or financial advice. Our website and marketing collateral use reference rates as an indicator only and should not be used for decision making. HODL may not be the right approach for every crypto investor and every cryptocurrency.

Is HODL Worth It for Individual Investors?

Our partners cannot pay us to guarantee favorable reviews of their products or services. However, since they have outsized positions, they need to sell while everyone is buying, so they keep shilling the asset as they offload their positions and once they stop pushing it. Typically, the price of the asset comes crashing down as the latter buyers look to exit their positions. To shill is another common term within the social media circles of crypto enthusiasts which means to selfishly promote a coin or token.

  • The crypto market crashes that happened in 2018 and 2020 are perfect case studies that support the HODL investing strategy.
  • 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.
  • It is used in the crypto ecosystem to refer to a strategy of holding onto bitcoin holdings through its various price fluctuations and volatility.
  • On December 18, 2013, Bitcointalk user GameKyuubi uttered the phrase “I AM HODLING” as part of a rant against the difficulty and even futility of trading cryptocurrency.
  • Even a long-term cryptocurrency investor would be well-served to articulate clear goals and to monitor the emerging space for systemic risks.

HODLing might not be the best strategy if the investor is looking for short-term gains. Even though traders don’t often sell their positions at the absolute peak (because they cannot predict it), HODLing over time generally will give you positive returns. Even if you bought in late 2017 at $19,000 and sold in early 2021 at $40,000, you would have had a 110% increase on your investment.

What is hodl in the crypto world and its advantages

The original crypto plunged to $4,000 before ending the year around $29,000. Indeed, the original HODLer in 2013 had no illusions about their ability to play the market. But the post conveyed a confidence that time would improve Hexn Bitcoin’s fortunes. We believe everyone should be able to make financial decisions with confidence. HODL ($HODL) is a cryptocurrency that was named based on the popularity of « HODL » as an expression in the crypto community.

  • It is worth noting that there could be some differences between a HODL strategy and the traditional buy-and-hold investing strategy.
  • We’re also a community of traders that support each other on our daily trading journey.
  • Likewise, when a stock or crypto price is at its highest, investors often feel excited and overconfident, prompting them to buy at the worst possible time.
  • The phrase makes more sense when used to refer to worthless coins or tokens – also called ‘shitcoins’ – that have little to no utility outside speculation.
  • In contrast, other investors choose to time the market, which leads them to make short-term decisions or trades.

After all, there’s a lot of crossover between these investment strategies. Investors who are concerned about losing a hardware wallet or can’t afford a high-quality cold wallet can choose to keep their assets on a centralized exchange, if they are comfortable with counterparty risk. As with any investment strategy, there are benefits and drawbacks to the HODL technique. “FUD,” “to the moon,” “DYOR”—there are so many industry-specific colloquialisms that newbies to the market could benefit from a crypto-specific dictionary.

HODLing as an investment strategy

This is important as it can help spur adoption of crypto as a payment method. Meanwhile, BUIDL encourages people to roll up their sleeves and build decentralised applications, platforms and tools that improve the crypto ecosystem. The term HODL began as an accidental (beverage induced) misspelling of ‘hold’. He is also a staff writer at Benzinga, where he has reported on breaking financial market news and analyst commentary related to popular stocks since 2014. Mr. Duggan is also the author of the book « Beating Wall Street With Common Sense » and has contributed news and analysis to U.S.

  • HODL helps connect people in the Web3 ecosystem and encourages the crypto community to focus on the positive aspects of blockchain technology.
  • 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’s a fun nod to the term and its origins in the crypto ecosystem.
  • 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.
  • HODLing forces you to think about the long-term benefits of your strategy.
  • However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies.

Blind faith in a product or idea might seem like a poor quality for an investor — like somebody refusing to sell shares of Blockbuster when Netflix was first on the rise. But according to financial planners and analysts, it’s also a rational response to a market whose ups and downs are exceedingly difficult to predict. HODL was later retrofitted to be an acronym (backronym) for “Hold On for Dear Life” and refers to not selling, even during strong market volatility and poor market performance.

Register On Phemex Now To Begin Trading

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.

  • The misspelled term “HODL” circulated quickly in the forum and spread to other cryptocurrencies.
  • After a few whiskeys, they misspelled “I AM HOLDING” and wrote “I AM HODLING” instead.
  • But these phrases have extended beyond crypto to other assets, such as stocks.
  • 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.

U.S. Treasuries (« T-Bill ») investing services on the Public Platform are offered by Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. When you enable T-Bill investing on the Public platform, you open a separate brokerage account with JSI (the « Treasury Account »). SPEDN encourages people to use cryptocurrencies in the real world to buy goods and services, or simply to pay their bills with crypto.

The History of HODL

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. In addition to hacks and glitches, you could lose your crypto if a blockchain’s validator misbehaves (an occurrence known as « slashing »). Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Tokens based on a blockchain, NFTs are used to guarantee ownership of an asset. We’ll take you through three top tips to keeping your crypto secure and impervious to hacking.

What does HODL mean?

Decentralization is the major feature and advantage of cryptocurrency, as it is not issued by a central authority such as a country’s central bank. The misspelled term “HODL” circulated quickly in the forum and spread to other cryptocurrencies. Cryptocurrency investors use the term to refer to buy-and-holding assets for a longer time horizon rather than making frequent trades. “HODL” is a term that is often used in the Bitcoin investment community. It is a misspelling of “hold,” with an interesting story behind it. It is not only a popular term but is also considered an investment strategy.

Tips for Becoming a Successful HODLer

You will need to pay capital gains tax in Australia if you buy cryptocurrency and later sell or exchange it at a higher price — a crypto tax Australia. While Wall Street executives make long-term investments and Wall Street Bets traders have diamond hands. HODL culture has been a major help to long-term investors in Bitcoin and other top cryptocurrencies. But critics of HODL culture point out that the mindset only works if the value of cryptocurrencies continues to trend higher over the long term. Once-popular altcoins like OneCoin, BitConnect and TerraUSD are just three examples of cryptos that failed, generating a near-complete loss for any investors who employed the HODL strategy. The HODL community encourages other investors not to cash out of their crypto when prices rise and not to throw in the towel when crypto prices fall.

How does the Federal Reserve impact stocks, crypto and other investments?

HODL has since become a strategy used by people who admit they do not have the skills to do short-term trades – such as scalping, day trading, or swing trading. 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. Even though the word started out as a meme, it has become widely accepted in investing jargon as a word for holding cryptocurrencies with so-called diamond hands, a refusal to sell no matter what happens to prices. Cryptocurrencies are considered to be highly volatile assets, and it’s not unusual to see daily price changes of 20+% in either direction.

HODL vs. Buy-and-Hold Investing

Reference to any specific strategy, technique, product, service, or entity does not constitute an endorsement or recommendation by dYdX Trading Inc., or any affiliate, agent, or representative thereof (“dYdX”). DYdX makes no representation, assurance or guarantee as to the accuracy, completeness, timeliness, suitability, or validity of any information in this Article or any third-party website that may be linked to it. You are solely responsible for conducting independent research, performing due diligence, and/or seeking advice from a professional advisor prior to taking any financial, tax, legal, or investment action. Just as with stocks, bonds, mutual funds, and ETFs, investing in crypto is risky. The price of digital assets fluctuates significantly, so it’s important to pay attention to the market and do your research before investing.

While staking crypto could increase your gains over time, it’s riskier than holding coins in a hardware wallet. When Bitcoin’s price slumped in late 2013, user « GameKyuubi » wrote a post called « I AM HODLING » on the crypto forum Bitcointalk. In this thread, GameKyuubi advocated for amateur investors to hold their Bitcoin (BTC) positions as the coin’s value declined rather than day trading or panic selling. Each investor should make a decision based on their goals and risk tolerance. If you’re uncertain about your ability to play the market or want a long-term investing strategy, HODLing may be right for you. In fact, the HODL strategy was originally known as the buy-and-hold strategy, and is used in many investment areas, including the stock market.

As a result, hodlers are theoretically safe from some trading tendencies, be it buying at a high price or selling at a low price (the latter is also known as “SODL” – a less commonly used term derived from “HODL”). 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. Someone adopting a HODL strategy isn’t trying to time the market, and they aren’t going to sell their investments when they think the market might dip. Brokerage services for alternative assets available on Public are offered by Dalmore Group, LLC (“Dalmore”), member of FINRA & SIPC. “Alternative assets,” as the term is used at Public, are equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933 (as amended) (“Regulation A”).

HODLing is an easier and more rational method to take when investing in blockchain projects. Value investors such as Warren Buffett use this strategy when investing whereby they identify undervalued companies, buy the stocks cheap and hold them for several years. The idea is that the value of the stocks would have risen considerably within this period. Others say HODL until your coin becomes a fully spendable currency and you won’t need to worry about having to sell it back anymore. The risk here is that not all coins are created equal, and no one can guarantee the future of any crypto and its ability to become a full-fledged currency. This is especially true with all the new Central Bank Digital Currencies (CBDC) that many governments around the world are developing.

Premium users get access to guidance from expert analysts, as well as data from Morningstar’s industry-leading reports. When deciding whether to HODL, consider your own investment strategy and goals, as well as your risk tolerance. Bitcoin investors were taking to forums like Bitcointalk to share their fears and encourage each other to stay the course.