HODL

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”).

• Cryptocurrency is a type of digital currency supported by blockchain technology.
• After all, there’s a lot of crossover between these investment strategies.
• Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate.

Neo from The Matrix asks Morpheus, “What are you trying to tell me, that I can trade my Bitcoin for millions someday?” Morpheus responds, “No Neo, I’m trying to tell you that when you’re ready … you won’t have to.” If you have ever spoken to anyone in crypto, the term HODL will probably sound familiar to you. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

Crypto hodl vs. trading

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.

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 Development of Crypto Regulation: Brief Introduction

Other long-term BTC holders who resisted sell-offs started describing themselves as “HODLers,” and HODL culture was born. While it’s used by some people as an acronym for Hold On (For) Dear Life, it actually just means hold – don’t buy more for now, but don’t sell what you have. Generally, the term is only really used in the crypto world, where prices are super flaky and can drastically change at any point.

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• Buy-and-hold investors tend to hold their assets for an extended period of time to profit from the long-term value appreciation.
• It can significantly hinder their role in supporting international transactions, affecting the value of cryptocurrencies.
• The idea is to purchase stocks and hold onto them for a long period, regardless of market fluctuations.
• However, staking is only worthwhile if you believe your crypto will, at minimum, maintain its value.
• In that case, buying and holding means you’ll ride it all the way to a complete loss.

If you have a positive outlook on blockchain technology and aren’t afraid of market volatility, HODLing crypto may be worth considering. However, those more interested in taking an active approach to portfolio management should focus on daily trading over HODL. Hodling sounds a lot like the long-term buy-and-hold strategy The Motley Fool employs in the stock market. Generally speaking, we recommend owning stocks for at least five years. The wealth-building benefits of compound returns make a bigger difference in a longer time frame. The same philosophy should work for high-quality cryptocurrencies as well.

Is there a HODL cryptocurrency?

Traders who use the SPEDN strategy believe in spending cryptocurrency in order to encourage real-world adoption. This approach believes that popularizing digital currencies can help raise their value. HODLing requires a long time horizon, so it’s usually best for investors that don’t need access to their cash for a long time. If you’re looking to cash out quickly, HODLing may not be the right approach for you. What he’s suggesting is, that unless you’re a great trader, the HODL investment strategy can be a good option in crypto. Cryptocurrency has been the best performing asset class of the past decade.

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• Use of the term was later extended to include other cryptocurrencies.
• 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.
• 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.

Cointree is the best crypto exchange in Australia and is trusted by tens of thousands of investors. All you need to do is create and verify your account, deposit funds, and you’re ready to make your first purchase. Moreover, many investors believe that it’s still early days for crypto and there are still incredible gains to be made.

Frequently asked questions about HODL

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.

• Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment.
• It’s worth noting that ‘market timing’ — the act of trying to predict future price movements — is notoriously difficult and risky, even for seasoned investors.
• Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice.
• 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.

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 Hexn 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.

Why “HODL” Cryptocurrencies

“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.

Why do people in crypto love to HODL their coins?

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.

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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.

What does HODL mean in crypto?

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.

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.

Understanding the HODL Strategy

Digital currency bitcoin has seen a tumultuous ride in recent weeks, as the price fell to trade below $6,000 per coin in June, down from a high of over $19,000 last year. And, everyone from Warren Buffett to athletes and celebrities have weighed in on the future of cryptocurrencies. HODL is one of those terms that’s shown up amid the rise of cryptocurrency.

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.

FUD

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.

Is HODL Worth It for Individual Investors?

Public’s social investing platform gives you access to a knowledgable and diverse community of fellow investors. By sharing insights and updates on market activity with each other, Public’s users can stay on top of the market and build confidence in their investing strategies. While the SPEDN strategy involves buying real-world goods with cryptocurrencies, BUIDL traders use their crypto to build blockchain applications. The idea behind this strategy is to encourage users to contribute to the development of cryptocurrency infrastructure, which will ideally may raise the value of digital currencies. Saving is all well and good, but can you imagine being able to save and at the same time earn a profit for it? Today we are going to talk about what hodl is and what are the advantages that this strategy can bring.