As you probably already know if you follow the cryptocurrency for a long time, HODL is a term born from a 2013 forum post by a user named Gamekyuubi. The user, a cryptocurrency investor, in the throes of the euphoria of the moment published a post titled "I AM HODLING". She clearly meant to write "I am holding“, But the emotion was such that it got the better of the spelling.
At the time, HODLing was just a misspelling that everyone laughed about. Today it has become a strong ideology and a favorite of many cryptocurrency enthusiasts. Some investors of the forum have also followed the advice of the author, buying Bitcoin in the $ 100 range and have maintained it ever since. Given the current BTC prices, while falling, it must be said that they have done very, very well.
What does HODL stand for
HODL today simply means "Hold on for dear life", that is… don't sell cryptocurrency. As the author explained in his forum post, anyone who is not an experienced day trader will lose all his money on the market.
The ideology of HODLing as an investment strategy requires the investor to hold a cryptocurrency asset for a long, long time. Indeed, real HODLers don't even sell their assets because they believe cryptocurrencies are the future of finance.
If you are a cryptocurrency enthusiast, and inexperienced, HODLing might be for you. Eventually, it is very likely that Bitcoin will rise in price as it becomes fully mainstream and as more and more individuals and institutions continue to recognize it as a store of value.
The HODL strategy
HODL can be a good strategy if you don't believe you can successfully trade the cryptocurrency market. Those who believe in Bitcoin (or cryptocurrencies) as the future of finance know that the future potential of prices makes other trading strategies such as swing trading much more risky.
Therefore, the swing trader and short-term investors they shouldn't do HODL. Unfortunately, some prefer to buy cryptocurrencies quickly during bullish runs for immediate profits, even if they don't believe cryptocurrencies are sustainable in the long term.
Based on the price trend, The best time to accumulate Bitcoin to HODLing is during bear markets. Historically, Bitcoin dips up to 90% in each bear market, after which it bounces back to surpass previous all-time highs. Over the past decade, the price has soared 200% annually, which is profitable for investors doing HODL.
Said this, it is impossible to give an accurate direction of the BTC. Instead, a logarithmic chart is needed to get an idea of the price trend since the creation of Bitcoin. This will help account for all the market volatilities over the past decade.
The best part about HODLing is that it's simple. All you have to do is set up your cryptocurrency wallet, buy Bitcoin or any other cryptocurrency you want to hold and then HODLing.
How do HODLers know when to sell?
The answer to this question depends on the goals you have set for yourself. It's possible HODLARE a cryptocurrency until it reaches the specific value you have in mind. For example, some HODLers hold Bitcoin because they believe in the future decentralization of the financial system.
The HODLers are called maximalists because they wait for Bitcoin to take over completely and for the entire financial system to become decentralized. If that were to happen, BTC would be worth millions of dollars.
The difference between Bitcoin holders and HODLers is that the former hold BTC in the medium and long term, while the latter will not sell their BTC until they become a mainstream store of value globally.
However, the term is now used to describe investors who buy and hold cryptocurrencies for a few years to maximize the value of their investments. Note that it is not possible to HODL all types of coins.
Before using this strategy for any cryptocurrency, be sure to do your research to ascertain the purpose and use cases of the coin. This will help you decide if HODLing is worth doing. And don't forget to consider your risk tolerance before choosing your trading and investment strategies!