Cryptocurrency has stormed the world in the last ten years. With thousands of digital coins to choose from, most investors get bombarded with various options and strategies. Here’s one term that pops up while discussing investment strategies- HODL. What is HODLing? If you’re new to the crypto scene or want to know more about this term, you’ve come to the right place. What do we mean by HODLing and where does it come from? This article seeks to explore what this term is, where it originates, and how it can benefit you as an investor.
What is HODLing?
HODL is the misspelling of the word “hold.” It came from 2013 when a Bitcoin enthusiast typed “HODL” in an online forum instead of “hold.” Since then, it has become a popular term in the crypto community. In essence, HODL means you buy and hold your cryptocurrencies for long instead of selling them soon to take profits or cut losses.
Why HODL?
In simple words, the basic idea of HODLing is that you expect one cryptocurrency that you have invested in will appreciate significantly in the future. Thus, by holding your assets, you can profit from price appreciation in the long run.
Origins of HODL
What is HODLing and where it come from? The term gained steam after user GameKyuubi posted on the Bitcointalk forum in December 2013. He was to deflect speculations that he was “not selling” his Bitcoin as prices remained extremely volatile. The community found it relatable, and soon “HODL” became a rallying cry for long-term investors.
What is HODLing Meme?
With how many internet trends are going on, HODL has become a meme. People started making funny graphics and phrases about it. You might even see the phrase “HODL or Die” or graphics of somebody just holding their coins for dear life. Of course, the lighthearted attitude helped cement HODL as a household term in the cryptocurrency space.
What is a Crypto Hodler?
A crypto hodler is someone who holds onto their cryptocurrency long-term rather than actively trading it, believing in the long-term potential of crypto assets over time.
What is HODLing Strategy?
The HODL strategy advocates buying and holding cryptocurrencies for the long term, rather than actively trading. It encourages investors to hold onto assets through market volatility instead of trying to time the market.
Learning Market Volatility
The crypto market is known to be volatile. Prices can shoot through the roof one day and plummet the next. HODLing seeks to counterbalance the high and low emotions that trading provokes. Instead of panicking because of falling prices, a true HODLer follows his strategy and waits for a rebound to follow.
Asset Selection
Not all Cryptocurrencies are the same. In HODLing, you want to choose assets you believe in. You want to look for projects that have good fundamentals and a strong development team behind the project, along with a strong use case. Most of the HODLers hold Bitcoin or Ethereum; however, there are a lot of great coins out there.
Timeframe
When you have chosen to HODL, you need to set a duration. Many investors hold for years, while others could choose the trade for decades. Patients must have a long-term perspective.
Advantages of HODLing
What is HODLing and its benefits? Here is the answer. HODLing allows investors to benefit from price appreciation over the long run without needing to actively trade cryptocurrencies. It promotes a buy-and-hold mindset through market volatility instead of reacting to short-term price fluctuations.
1. Ease
HODLing is easy. You buy coins and hold. You do not have to worry with daily price changes, nor do you make constant trades. For this reason, HODLing can be less stressful on the crypto investor.
2. Lower Transaction Charges
Every time you either buy or sell cryptocurrency, there are transaction fees. Hyper-volatility trading spends your profit so many times in your pocket regularly. In HODLing, you avoid all these costs since you do not trade frequently.
3. Higher Profits
Historically, most altcoins have always trended upwards over time. The same applies to Bitcoin. While it is trading at less than a dollar in 2010, it hit an all-time-high of more than $60,000 in 2021. Past performances are never guaranteed outcomes, but many HODLers think holding their coins will be a good investment strategy.
4. Avoid Emotional Trading
Trading can become emotional. Greed and fear factor into silly decisions. HODLing will prevent you from becoming one of them because you’re taking a disciplined approach. Whatever is happening in the market does not matter. You stay on your plan.
5. Building a Better Portfolio
HODLing can be used to build up a diversifying portfolio overtime. Rather than selling assets in search of new assets, it enables you to accumulate various cryptocurrencies that means the more exposure to different projects.
Risks of HODLing
If you know what is HODLing, then you should also be aware of it risks. Whereas the benefit of HODLing is a reward, there are risks involved also.
Market Volatility: The crypto market is very volatile. Prices can drastically come down and, therefore, seeing your investment lose value can be hard if you have not prepared for this
Long-term Investment: Long-term mind. You have to sit through highs and lows for a long time. If you are looking to make quick wins, then HODLing is not your ticket
Loss Risk: Not all coins are winners. While some have gone on well; for example, Bitcoin and Ethereum, there are many altcoins that have lost fortunes or died off. Good research is imperative before investing in a coin.
Tips for Successful HODLing
Now you know what is HODLing. If you have decided to implement HODL, use the following tips to help you prosper.
1. Do Your Homework
HODLers are always recommended to know what cryptocurrency they purchase before investing. Understand both the technology behind it, the people behind it, and even the demand within the market. “Know more than others about yourself.” Knowledge is your great tool in making good decisions.
2. Set Clear Goals
Describe what you would like to accomplish by HODLing. Are you saving for retirement, buying that big-ticket item you want, or something else? Well-defined goals will help you keep your eyes on the ball and driven.
3. Use a Safe Wallet
Store your digital currencies in a safe wallet. Hardware wallets are one of the most secure forms of wallets compared with exchanges. The security of your coins must be of great concern.
4. Educate Yourself
The crypto market is always in a constant fluctuation. Stay updated with the news, trends, and the happening in the industry. Knowledge will lead you in making better decisions on investment.
5. Be Patient
HODLing is all about patience. Be sure that some prices will change, but your long-term goals will always be there. Do not give in to the desires to sell when the market dips. The course to see through in executing your strategy.
Best Coins for HODLing
Here are some of the cryptocurrencies that are often considered good long-term holds (HODLs):
Bitcoin (BTC) – As the largest and most established cryptocurrency, Bitcoin is seen by many as a secure long-term investment due to its network effects and brand recognition.
Ethereum (ETH) – Ethereum is the dominant smart contract platform and has strong development activity. It’s positioning itself as a foundational web 3 infrastructure.
Cardano (ADA) – Designed with a focus on scalability and sustainability. Promising project developing dapps and DeFi on its proof-of-stake network.
Polkadot (DOT) – Aims to interconnect blockchains through its relay chain technology. Has an active development team working on its interoperability solutions.
Solana (SOL) – Fast, cheap network that can process thousands of transactions per second. Gaining developer mindshare for DeFi and Dapps.
Binance Coin (BNB) – Used to pay discounted fees on the large Binance exchange. Continued growth expected as Binance expands.
Chainlink (LINK) – Leading decentralized oracle network providing reliable off-chain data to smart contracts. Key infrastructure for blockchain adoption.
Polygon (MATIC) – Ethereum scaling solution with growing ecosystem of dapps and activity after upgrades.
Bitcoin Cash (BCH) – Branch of Bitcoin with bigger blocks for greater transaction capacity and lower fees.
Those are some top long-term holds based on their networks, development, and positioning in the crypto industry. DYOR as always
Conclusion
We have covered what is HODLing here: HODLing is perhaps one of the most prevalent practices in cryptocurrency and with good reason. If you can modify your mindset to play the long game with selected assets, things should be kept relatively simple for investment. Of course, with this kind of fire you are playing, risks need to be observed and will depend on knowing what’s going on within the market.
So, if you are ready to take the leap into HODLing, all you have to do is research, set your goals clearly, and be patient-most of all. Time and dedication can prove the HODLing approach to be a rewarding venture while investing in cryptocurrencies.
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