The main difference is that HODLing often involves the support of a community on a crypto forum, which encourages investors to wait out rough periods in the market. The buy-and-hold strategy, on the other hand, has no social component. Today, Bitcoin prices are also down 59% in 2022 as rising interest rates have triggered a sell-off in cryptocurrencies and other risk-on assets.

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• 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.
• As we have mentioned before, cryptocurrencies are highly volatile assets, and there is a high chance that a trader can lose their investment quickly.
• When deciding whether to HODL, consider your own investment strategy and goals, as well as your risk tolerance.
• Depending on your investment strategy and risk profile, HODLing can be a good approach.

Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. The HODL strategy, also known as buy-and-hold, involves buying an asset and holding onto it, even if the market becomes unstable. HODLing is based on the idea that, historically speaking, the market will ultimately trend upward.

FUD

The HODL token may seem like an attractive source of passive income, but the price of a HODL token is down more than 99% from its all-time high. A 10% tax is applied to each HODL transaction, and the tax is automatically liquified and converted to BNB (BNB). That BNB is then transferred to a reward pool and is distributed every seven days to investors who hold HODL tokens in their wallets. Even billionaire investor Ray Dalio said he was wrong about 66% of the time he personally disagreed with the “buy and sell” decisions of his hedge fund’s automated quantitative investing process. The “Oracle of Omaha” famously encouraged investors never to own a stock for 10 minutes that they wouldn’t be comfortable holding for 10 years.

• This is because HODLING is a middle ground where you’re assuming things will work out, instead of putting more money into assets, or selling assets when part of you thinks they could be worth much more tomorrow.
• You only sell in a bear market if you are a good day trader or an illusioned noob.
• HODLing is simple to understand, but it requires a lot of patience, discipline, and conviction.
• The price of digital assets fluctuates significantly, so it’s important to pay attention to the market and do your research before investing.

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. HODLing is an investment strategy derived from the traditional financial world where it is referred to as buy and hold.

Frequently Asked Questions

The crypto market crashes that happened in 2018 and 2020 are perfect case studies that support the HODL investing strategy. In December 2017, the price of Bitcoin reached $19,700, but by November 2018 Bitcoin fell to a low of $5,500. Then, from 2018 to middle 2020 the price of Bitcoin (more or less) stayed below $10,000, and rarely broke the $10,000 mark. However, by summer 2020 a bull market began and Bitcoin saw its price go from $10,000 in June to $60,000 by April 2021. It went parabolic, and as a result some day traders made money, but also many people lost out on the action (not the HODLers).

• HODLing campaigns are also witnessed whenever the price of an asset starts falling.
• HODLing is an investment strategy derived from the traditional financial world where it is referred to as buy and hold.
• This approach believes that popularizing digital currencies can help raise their value.
• Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.
• Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade.

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this post may contain references to products from our partners. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey.

The History of HODL

The cryptocurrency world is full of exciting and interesting eccentricities, including the lingo. Hopefully, by going through this article, you have familiarized yourself with some of the more common unique terminologies used within the blockchain space. The term ‘flippening’ is used within the crypto circles to refer to a hypothetical moment in which the market capitalization of Ethereum surpasses that of Bitcoin. The latter is the oldest and largest cryptocurrency by network value and Ethereum’s market cap has trailed Bitcoin’s for several years. In crypto, the comparable strategy to value investment would be ‘HODLing,’ which works the same way. An investor identifies a project with great potential and invests in it for the medium to long term.

• The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice.
• 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%.
• Should that occur, then the exchange rates between cryptocurrencies and fiat money would become irrelevant to crypto holders.
• Users can earn rewards in Binance coin by depositing their tokens in a liquidity pool.

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 best time to HODL a cryptocurrency is often subjective and depends on various factors, including market conditions, particular cryptocurrencies, and individual financial goals.

What does HODL mean in crypto?

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. Based on these principles, the best time to HODL is now, always, and forever. A true believer would always hold on to their tokens, even if markets crash or become extremely volatile.

• However, those more interested in taking an active approach to portfolio management should focus on daily trading over HODL.
• “I believe this is crucial for new investors because they are more likely to act emotionally or impulsively,” Porter says.
• 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.
• These schemes are often orchestrated through apps like Slack or Telegram, he adds, and advises curious chatroom readers to beware of such gimmicks.
• HODL is a term used in the cryptocurrency world to describe a buy-and-hold investing strategy.
• Hodling crypto only works with long-lived digital currencies that can build value over time.

Given how volatile swings are when it comes to cryptocoins, the need to make a decision on HODLING occurs more frequently than with traditional stocks. This is because HODLING is a middle ground where you’re assuming things will work out, instead of putting more money into assets, or selling assets when part of you thinks they could be worth much more tomorrow. Despite the recent high rate of return and the reasons to invest, as mentioned above, prudent investors should also reckon with the risks of holding cryptocurrencies.

‘HODL,’ ‘whale’ and 5 other cryptocurrency slang terms explained

It may strike you as a misspelling, and you will be right, but within the blockchain space, that spelling is correct. With all the attention, jargon that was once just used for inside jokes in early cryptocurrency chat rooms and on Reddit threads has now become a part of the dialogue. The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site.

Does it make sense to HODL?

Most importantly, you can store your coins in your free multi-coin wallet that you receive when you sign up. Inspired by the misspelling of HODL, crypto communities also encourage each other to SPEDN (spend) or BUIDL (build). Much like the HODL meme, they’re intended to help grow the crypto space. While the term initially was a direct reference to ‘hold’, in true crypto style, the term was ‘hard forked’ and now carries several meanings. “I believe this is crucial for new investors because they are more likely to act emotionally or impulsively,” Porter says. But Bitcoin’s gains don’t come without years of “HODLing” through stomach-turning losses.

Understanding HODL: An Overview of the Top Crypto Trading Strategy

People who HODL crypto must believe their preferred coins will gain widespread adoption (or at least have a net increase in value) while remaining calm amidst significant price swings. The cornerstone of HODL’s appeal is its simplicity—novice investors can understand how to HODL within a few minutes. While big-league investors have the knowledge and resources to capitalize on small price changes and volatility, amateurs are unlikely to predict trends and act on them in time to profit (or minimize losses). When HODLing, buyers research and purchase assets they’re confident in, then hold on to them. JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries.

HODL and Bitcoin

Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Different countries and parties express different attitudes towards the use of cryptocurrencies. It can significantly hinder their role in supporting international transactions, affecting the value of cryptocurrencies. Unfavorable policy-making and public perspective might drag down the asset value for the long term. Long-term HODLers may use DCA strategies to add to their position, especially during bear markets.

Crypto is still relatively new, so we can’t look back over time and see how the HODL strategy has performed. 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. It’s important to consider cryptocurrency volatility in your investment decisions.

This material is not intended as a recommendation, offer, or solicitation to purchase or sell securities, open a brokerage account, or engage in any investment strategy. “HODL” originated as a misspelling of “HOLD” (written in all caps), in an online post by an early Bitcoin investor. But “HODL”, as it has gained popularity among crypto enthusiasts, has come to mean “hold on for dear life”. 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. In contrast, other investors choose to time the market, which leads them to make short-term decisions or trades. Compared to buying and holding, market timing needs a lot more skills and expertise, meaning beginners have a disadvantage with this strategy as opposed to value investment.

HODLing stocks can help investors avoid the instinct to pull out when the market is in decline. By holding stocks for the long term, investors can weather short-term market instability. The HODL strategy is about holding assets over the long term, which means that cryptocurrency investors don’t have to be concerned about timing the market.

Learn where the term came from and why it’s a useful approach for amateur traders. It’s essentially the opposite strategy from day traders trying to maximize their cryptocurrency profits on a short-term basis. JSI uses funds from your Treasury Account to purchase T-bills in increments Hexn of $100 “par value” (the T-bill’s value at maturity). The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability – yield is subject to change.

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When looking for what coins to invest in to HODL, traders and investors can first look at the specific cryptocurrency’s historical chart. Now that you’ve heard some of the arguments for and against the HODL strategy in cryptocurrency trading, you might be wondering whether it’s really worth it. After all, we know that cryptocurrency doesn’t have the same proven track record that the stock market has. The strategy of buying and holding an asset for a long period of time is hardly a new one, and its roots predate the invention of cryptocurrency. HODL is a term used in the cryptocurrency world to describe a buy-and-hold investing strategy. The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice.