HODL: The Cryptocurrency Strategy of “Hold on for Dear Life” Explained

HODLing becomes an ideological belief about the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them. 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.

• Securities products offered by Open to the Public Investing are not FDIC insured.
• Although the term “HODL” originated in the crypto community, stock market investors have been HODLing for a long time.
• It is the kind of mindset that will help you learn and contribute more positively to the community.
• So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information.

You can also participate in staking rewards with many cryptos, allowing you to generate income while you continue to hold the digital asset and potentially ride it to new heights. However, it’s worth noting that being named ‘HODL’ doesn’t necessarily make it a valuable or safe investment. Like with any other cryptocurrency, the decision to buy and hold HODL tokens should come after careful research. Yes, there is a cryptocurrency called HODL (Hodl Hodl) with an eponymous ticker (HODL). At its core lies the idea of rewarding holders for not selling their tokens, thus providing an incentive for the ‘HODL’ strategy. It’s a fun nod to the term and its origins in the crypto ecosystem.

HODLING as a Strategy and Guiding Philosophy

Luckily, many believe that Bitcoin is still in its infancy and you may still be early if you start investing now. In that case, buying and holding means you’ll ride it all the way to a complete loss. Regardless of what you buy, you’ll need to analyze whether it makes sense to use a buy-and-hold strategy.

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. The tax amount is converted into BNB tokens and a percentage of the gains is redistributed back to users from the collective liquidity pool. The prices of Bitcoin and other cryptocurrencies are notoriously volatile, but HODLers disregard even large price swings. Since then, HODL is being described as an acronym for “hold on for dear life” more and more.

Understanding the HODL Strategy

To learn more about digital assets and trading strategies, check out our academy. The boldness of GameKyuubi’s post struck a chord with other Bitcoin investors. Shortly after “I AM HODLING” went live, crypto fans began sharing it on social media. Soon, HODL memes flooded the online community—but beneath the humor was an on-point investment strategy.

• “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.”
• Since then, HODL is being described as an acronym for “hold on for dear life” more and more.
• This typo quickly caught on within the forum and then spread across the wider crypto community.
• HODLing is a cryptocurrency investment strategy not unique to crypto but rather a rehashed term made to appeal to the eccentric crypto community.
• Soon, HODL memes flooded the online community—but beneath the humor was an on-point investment strategy.

The misspelling set off a frenzy in the online world of crypto investors and the term quickly became a meme. Crypto traders began to encourage each other to HODL, or hold, their investments even when the market was volatile. The term “HODL” first appeared in an online cryptocurrency forum in 2013 as a misspelling of the word “hold” — a typo that readers quickly embraced.

“HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo.

In a perfect world, you’ll never invest in any of these cash-burning crypto projects. In reality, you’re better off selling some cryptos before they burn too much of your money. Many newer investors will start out HODLing by using a dollar cost-average strategy. This means that you buy a set amount every day, week, or month, which allows you to buy in at the average price throughout your investment period.

• Crypto pump and dump is an investment scheme in which instigators buy large positions in low-cap (market capitalization) coins or tokens before shilling these assets to other investors.
• With a relatively short history compared to other types of assets and fiat currencies, cryptocurrencies face a future with lots of unknowns.
• 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.
• We do not include the universe of companies or financial offers that may be available to you.

Users can earn rewards in Binance coin by depositing their tokens in a liquidity pool. It is worth noting that there could be some differences between a HODL strategy and the traditional buy-and-hold investing strategy. 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. But long-term cryptocurrency investors, on the other hand, tend to hope for more substantial gains. Not only has “hodling” turned into one of the most popular cryptocurrency terms, it’s also served as a strategy for traders, albeit a basic one, given the volatile nature of the crypto market. This refers to a buy-and-hold situation where hodlers stay invested and refrain from trading when the asset price decreases.

Cons of HODLing

The answer to the birth of this concept is the extreme volatility that exists in the cryptocurrency market. The crypto market is known for being very volatile, which can be a big problem and cause huge losses to cryptoasset investors. 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.

• The acronym is a misspelling of the word “holding” by a user on an online forum.
• But the post conveyed a confidence that time would improve Bitcoin’s fortunes.
• The same philosophy should work for high-quality cryptocurrencies as well.

So you buy, you hold on for dear life — hodl — and you build wealth in the long haul. Some enthusiasts have even accepted HODL as an acronym, meaning to “hold on for dear life.” The term is also related to “diamond hands,” which means that you have an unbreakable grip on the crypto you own. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Keep in mind that other fees such as regulatory fees, Premium subscription fees, commissions on trades during extended trading hours, wire transfer fees, and paper statement fees may apply to your brokerage account. Please see Open to the Public Investing’s Fee Schedule to learn more. When you buy and hold, you don’t have to worry about market volatility, or watch for every movement in the market to time your sales.

How hodl works

There are HODL memes, HODL forums, and even HODL T-shirts, but the term is more than a punchline. In fact, it’s synonymous with a popular—and powerful—passive investment approach. Oftentimes, other investors will suggest HODLing as a solution to FUD. If you’re looking for ways to shape your investing strategy, Public Premium features can help.

HODLing as an investment strategy

The term is, however, used to describe huge losses, and even though ‘huge’ is considered a relative term, losing a lot of coins qualifies as being rekt. Now that you understand what it means to HODL, let’s dive into some of the other popular crypto-related terms that are worth knowing in order to participate in conversations amongst fellow blockchain enthusiasts. “Pump and dumpers are people who often say, ‘Hey, let’s all of us together pump this coin,’ which means buy the coin, create the demand in the market, the coin will go up in value,” Saddington says. FUD means “fear, uncertainty and doubt.” Bitcoin followers advise to HODL your coins despite the FUD of those outside the community. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.

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

Before taking action based on any such information, we encourage you to consult with the appropriate professionals. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. Some crypto traders choose to use other approaches, like SPEDN or BUIDL. While the misspelled terms are send-offs of HODL, these strategies are completely different in their approach.

Ready to invest?

While it’s still unclear if HODLing will pay off for crypto investments, it’s historically been a go to approach for stock traders who want to invest in a bear market. The goal of HODLing is to wait out recessions and other dips in the market, with the goal of cashing out when the market improves. Many long-term HODLers take the examples of successful gains as a validation of a strategy that at times can border on zealotry. In online forums devoted to cryptocurrency, users can be shunned for liquidating part of their holdings even after significant long-term gains. HODL is a term derived from a misspelling of “hold,” in the context of buying and holding Bitcoin and other cryptocurrencies.

Trading vs. HODL: Who Makes The Biggest Profit?

If you simply bought bitcoin ten years ago and held it until today, you would have made incredible returns. So the reason people HODL crypto is simple; it seems to pay to be a hodler. Back in 2013, someone with the username GameKyuubi made a post on the BitcoinTalk forum. After a few whiskeys, they misspelled “I AM HOLDING” and wrote “I AM HODLING” instead. Other users found his spelling mistake hilarious and they became ‘hodlers’ too.

What is ‘HODL’? 10 Crypto Slang Terms Explained

The idea of hodling crypto is to buy a cryptocurrency and hold it for a very long time. To do it right, you shouldn’t take profits when your crypto is skyrocketing, and you shouldn’t back out when prices are going down. Stock market investors often use the buy-and-hold approach for long-term investments, which is effectively the same as HODLing. When you HODL, you give up the chance to invest that money in a diversified portfolio of stocks, bonds, exchange traded funds (ETFs), and mutual funds.

Risks of “HODLING” Cryptocurrencies

The ethos and mantra, however, could be applied to any digital currency or even traditional stocks and shares. It’s just more commonly said when it comes to cryptocurrencies, less so tokens. If someone on Wall Street told a client to HODL, they might get looked at weirdly, for example.

“HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo. The term “HODL” is crypto-industry slang for the practice of holding tokens for the long term. In other words, market timing is difficult and risky, and making the wrong moves will lock in paper losses that may otherwise disappear over time.

HODL or Day Trade

While it looks like an acronym – one of those terms like FBI or KFC that abbreviates a word into its initials – HODL is simply a misspelling of the word hold, albeit one that caught on for the silliness of its mistake. Bankrate follows a strict
editorial https://hexn.io/ policy, so you can trust that our content is honest and accurate. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. At Bankrate we strive to help you make smarter financial decisions.