What Does HODL Mean? How a Typo Became a Crypto Meme

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.

Then, that person is left with «a coin they don’t want at a price they can’t sell it [at].» To make sense of such crypto-slang, CNBC Make It asked Peter Saddington, a serial entrepreneur and early bitcoin investor who runs a bitcoin community called The Bitcoin Pub, to break it down. Saddington first purchased bitcoin in November 2011 when one coin only cost $2.52.

What does HODL mean?

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 https://hexn.io/ 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.

• HODLing is simple to understand, but it requires a lot of patience, discipline, and conviction.
• The price of digital assets fluctuates significantly, so it’s important to pay attention to the market and do your research before investing.
• You only sell in a bear market if you are a good day trader or an illusioned noob.
• 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.
• This is because HODLING is a middle ground where you’re assuming things will work out, instead of putting more money into assets, or selling assets when part of you thinks they could be worth much more tomorrow.
• Cryptocurrencies are considered to be highly volatile assets, and it’s not unusual to see daily price changes of 20+% in either direction.

Investments in T-bills involve a variety of risks, including credit risk, interest rate risk, and liquidity risk. As a general rule, the price of a T-bills moves inversely to changes in interest rates. Although T-bills are considered safer than many other financial instruments, you could lose all or a part of your investment. The above content provided and paid for by Public and is for general informational purposes only. It is not intended to constitute investment advice or any other kind of professional advice and should not be relied upon as such.

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We do not include the universe of companies or financial offers that may be available to you. It’s been demonstrated that the post’s author made the correct decision. The price of Bitcoin began another surge in mid-2017 and reached a historic high of $19,167 at year-end. However, the price fell again after the 2017 surge; it hiked again during the COVID-19 pandemic and hit a new high of over $58,000 in early 2021.

• When deciding whether to HODL, consider your own investment strategy and goals, as well as your risk tolerance.
• News & World Report, Seeking Alpha, InvestorPlace.com and The Motley Fool.
• Depending on your investment strategy and risk profile, HODLing can be a good approach.
• Disclaimer – Information found on our website is not a recommendation or financial advice.
• The term HODL was born from a post titled ‘I AM HODLING,’ made by a member named GameKyuubi, on the famous Bitcoin forum Bitcointalk in December 2013.

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.

The History of HODL

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.

• “I believe this is crucial for new investors because they are more likely to act emotionally or impulsively,” Porter says.
• However, those more interested in taking an active approach to portfolio management should focus on daily trading over HODL.
• The term almost immediately became a meme via social media, and the misspelling continues to live on in internet message forums such as the infamous Wall Street Bets board on Reddit.
• Hodling crypto only works with long-lived digital currencies that can build value over time.
• These schemes are often orchestrated through apps like Slack or Telegram, he adds, and advises curious chatroom readers to beware of such gimmicks.
• HODL is a term used in the cryptocurrency world to describe a buy-and-hold investing strategy.

An affiliate of Public may be “testing the waters” and considering making an offering of securities under Tier 2 of Regulation A. No money or other consideration is being solicited and, if sent in response, will not be accepted. No offer to buy securities can be accepted, and no part of the purchase price can be received, until an offering statement filed with the SEC has been qualified by the SEC. An indication of interest to purchase securities involves no obligation or commitment of any kind. Although the term “HODL” originated in the crypto community, stock market investors have been HODLing for a long time. You can HODL any stock you own, but it’s usually best to avoid HODLing risky stocks. There are a host of stock market myths out there and just like any other investment including crypto, the stock market also goes through bull and bear periods.

Where did the term “HODL” come from?

Still, if Bitcoin bulls are correct and BTC eventually becomes the world’s universal digital currency and preferred long-term store of value, long-term HODL’ers will benefit. “HODL can be employed, particularly when the market is declining, to assist investors in avoiding the urge to sell in a panic,” Porter says. 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. Value investors rely on fundamental metrics like price-to-book (P/B), price-to-earnings (P/E) and price-to-sales (P/S) ratios to estimate the intrinsic value of a stock.

• Typically used by Bitcoin maximalists, a HODLing strategy is similar to the conventional buy-and-hold investing strategy.
• In crypto, the term is used to refer to individuals or institutions with an outsized investment in a particular asset.
• Some say you should HODL until your coin is worth a sum that you’re happy with and then sell and take the profits.
• Stock market investors often use the buy-and-hold approach for long-term investments, which is effectively the same as HODLing.

“To HODL is an acknowledgment that while a lot of money can be made trading short-term volatility, a lot of money can also be easily lost,” Gagnon says. A good strategy, Morrison says, is to have a strong idea of why you’re investing in something when you buy it. And when you’re tempted to sell it, a key question is whether something about your analysis has changed. The devotion among HODLers comes from the culture surrounding Bitcoin and other cryptocurrencies, says David Duong, head of institutional research at the cryptocurrency exchange Coinbase.

What Does HODL Mean? How a Typo Became a Crypto Meme

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.

Is HODLing a Good Investment Strategy?

Some investors choose to HODL after buying during price drops, while others continuously invest over time, a strategy known as dollar-cost averaging. While some HODLers store their virtual currencies on centralized crypto exchanges (platforms for buying and selling cryptocurrency), many prefer to move their assets to self-custodial hardware wallets. A self-custodial wallet is strictly managed by the wallet holder, meaning there’s no centralized intermediary between the trader and their crypto. Keeping assets in a “cold” hardware wallet, like a USB drive, prevents hacking and theft— and unlike a centralized exchange, it’s completely offline. Although hardware wallets are less convenient to use, HODLers are hanging on to their assets for years, so they only have to worry about keeping the device safe until it’s time to sell.

The HODLer History

“HODLers” buy assets and keep them with the expectation that years down the road, they’ll be worth significantly more than they are today. It’s a healthy part of a sensible cryptocurrency investing strategy when combined with serious research into the quality and long-term prospects of your cryptocurrencies. Most of us will do better with a well-researched hodling portfolio than a short-sighted day trading approach. All investments involve the risk of loss and the past performance of a security or a financial product does not guarantee future results or returns. You should consult your legal, tax, or financial advisors before making any financial decisions.

HODL vs. Buy-and-Hold Investing

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 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.

Cons of HODLing

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.

It’s impossible to argue that long-term Bitcoin HODLers have not done well. Since its debut in 2009, Bitcoin’s value has climbed from just pennies to more than $60,000 at one point. So, a long-term buy-and-hold approach would have returned traders many times their initial investment, because the strategy prevented them from selling when things got tough. Whether you’re new to crypto or a seasoned investor, it’s important to make informed decisions about strategy—and that means knowing your options. Anyone interested in crypto’s future should understand what HODL means.

The phrase makes more sense when used to refer to worthless coins or tokens – also called ‘shitcoins’ – that have little to no utility outside speculation. Just like HODL, BTD or BTFD is a term used to encourage more investment whenever an asset’s price corrects during a rally, i.e., it dips. The correction is interpreted as a chance to buy more with the expectation that the price will inevitably rebound to the previous high. The term whale means a very large marine mammal that lives in the ocean.

Even though this is not the original meaning, we think this covers the idea of GameKyuubi fairly well. As he said himself, in a zero-sum game like trading, they can only take your money if you sell. Low cap coins are ideal for pump and dump schemes since instigators do not need to make huge investments to achieve the desired price action. Bag holder is a negative term used to describe anyone in possession of a significant amount of coins or tokens whose value has fallen to a level that it is unprofitable to sell. The strategy has proved right for the most part, as some of the larger assets have seen incremental value gains over a number of years. However, if an analyst could zoom into the monthly price action of most of these assets it would be evident that most experienced wild rides in short-term durations.

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.