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What does HODL mean in crypto?

At the time, the flagship cryptocurrency had lost 50% of its value in two weeks falling 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. It is, however, more difficult to engage in market timing strategies in crypto where price volatility is high.

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.

The Ultimate Guide To Keeping Your Crypto Secure

It is the kind of mindset that will help you learn and contribute more positively to the community. Since large is a relative term, a more acceptable definition of a whale is anyone whose singular actions are able to affect the price hexn.io of an asset. Individuals who participate in shilling often have a stake in the asset, and by drumming up support for the project behind the asset, they are trying to build up buying pressure which could lead to a price gain.

• Regardless of what you buy, you’ll need to analyze whether it makes sense to use a buy-and-hold strategy.
• Then, from 2018 to middle 2020 the price of Bitcoin (more or less) stayed below $10,000, and rarely broke the $10,000 mark.
• 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.
• It’s a tricky game and quite challenging for traders to time their transactions exactly right so as to maximize their profits each time.

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Investors who use DCA regularly buy small amounts of their preferred crypto assets over a long period. Some people purchase crypto at regular intervals (e.g., weekly), while others buy coins whenever they fall by a preset percentage (e.g., every 10% drop in a 24-hour window). In either case, the goal of DCA is to lower an investor’s average cost per coin. However, most HODLers keep their crypto for a minimum of a few years before selling. People who believe cryptocurrencies like Bitcoin will become mainstream currencies may never sell their portfolios, opting to keep their assets until they can spend them like fiat currency. HODLing means buying cryptocurrency and holding on to it long-term.

• 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.
• Many of these investors would take advantage of these sharp rises and falls in the market to make numerous trades in short periods and make quick profits.However, there are others who bet on another type of strategy.
• Bitcoin’s extreme volatility has produced a handful of horrendous annual returns throughout the years.

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. The term HODL, which has been in use for a few years, is the article’s main point of emphasis.

Origin of HODL:

Digital currency is notoriously volatile, and those who try to time the price swings may find themselves buying high and selling low — gradually or quickly eating away at their capital. 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. 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. If you’re interested in staking while you HODL, read through your cryptocurrency’s rules before depositing your funds. Be sure you know how long it takes to withdraw your digital assets and research the track record for each validator pool.

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• The term whale means a very large marine mammal that lives in the ocean.
• Moreover, many investors believe that it’s still early days for crypto and there are still incredible gains to be made.
• It is not only a popular term but is also considered an investment strategy.

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.

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• When people adopt a buy-and-hold approach with stock investing, they often put their money into index funds in the hope of not beating the market but matching it.
• We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools.
• A self-custodial wallet is strictly managed by the wallet holder, meaning there’s no centralized intermediary between the trader and their crypto.
• On these chains, anyone can lock («stake») their coins to earn a percentage-rate reward over time for their help securing the network.
• Harry Turner, founder of The Sovereign Investor, says the key to Bitcoin’s long-term investing outlook is its leading market position and its fixed supply.

News & World Report, Seeking Alpha, InvestorPlace.com and The Motley Fool. Mr. Duggan is a graduate of the Massachusetts Institute of Technology and resides in Biloxi, Mississippi. 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. Several altcoins that soared during the 2021 crypto boom, such as Dogecoin (DOGE), Avalanche (AVAX) and XRP (XRP), are down more than 88% from their all-time highs. Bitcoin’s extreme volatility has produced a handful of horrendous annual returns throughout the years. For example, Bitcoin shed 50% of its value in less than 48 hours of the Covid-19 pandemic-induced sell-off in March 2020.

Crypto Traders: To HODL Or Not To HODL?

There’s little sense in earning a 10% annual percentage yield if a coin’s price plummets by 25%. Dozens of high-profile blockchains now use a Proof-of-Stake (PoS) consensus mechanism to validate transactions. On these chains, anyone can lock («stake») their coins to earn a percentage-rate reward over time for their help securing the network. Staking on blockchains like Ethereum, Solana, or Polygon earns passive income with minimal effort. What started as a typo in an online forum has developed a real meaning of its own.

Can You HODL Stocks?

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.

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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.

Why “HODL” Cryptocurrencies

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It’s important to state that debating whether or not a HODL strategy is worth it when investing in cryptocurrency is entirely different from the question of whether to invest in cryptocurrency at all. Cryptocurrency is still relatively new and isn’t subject to the same regulation as traditional investing. As with any investment, you should make sure you understand cryptocurrency before you begin investing. 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.

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The author admitted to being a ‘bad trader’ and decided to hold onto his Bitcoin investment regardless of the bear market, thus becoming one of the earliest Bitcoin investors to promote this strategy. HODLing is simple to understand, but it requires a lot of patience, discipline, and conviction. Suppose a buyer isn’t fully convinced about the future of their coins. In that case, it’s challenging to HODL through market downturns—particularly because cryptocurrencies are among the most volatile and speculative asset classes.

What does HODL mean?

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.