It’s also commonly come to stand for “hold on for dear life” among crypto investors. In early bitcoin forums, someone posted a message that spelled the word “hold” wrong, and readers interpreted it as an acronym “hold on for dear life,” Saddington explains. “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.” In that case, investors buy when prices are low, hold an asset while the value increases, then try to sell it before the price dips.

• HODLing is often seen as a simple and effective strategy, especially for those who prefer to avoid the stress of daily trading.
• HODLing is a sound investment strategy that has been successfully applied even within the traditional markets; however, its efficacy depends on the investor’s goals.
• Saving is all well and good, but can you imagine being able to save and at the same time earn a profit for it?
• For cryptocurrency maximalists, HODL represents more than a strategy for reigning in FOMO (Fear of Missing Out), FUD (Fear, Uncertainty, and Doubt), and other profit-eroding emotions.
• In reality, you’re better off selling some cryptos before they burn too much of your money.

Because HODLing requires a long-term commitment, many investors use cold storage devices, such as hardware wallets, for security. Cold wallets keep a user’s private keys offline so their assets are not easily hacked or stolen. Even high-quality hot wallets are generally more vulnerable to hacks than cold wallets.

HODL or Sell

However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. Ben Gagnon, chief mining officer for Bitfarms (BITF), says HODL is more of a mentality than an investing strategy. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.

The HODL token operates using the Binance Smart Chain, and HODL token owners can earn Binance Coin rewards. At the same time, Bitcoiners use HODL as a form of encouragement during crypto winters, literally reminding each other to HODL onto their bags. There are several more words that we did not cover in this guide but we are sure you will run into as you interact with other community members. Be observant, keen, and keep an open mind when interacting with other enthusiasts in chat forums and on social media.

Risks of “HODLING” Cryptocurrencies

While there is incredible volatility in crypto, investors have earned the best returns of any asset class in the world simply by hodling their coins, as you can see in these bitcoin success stories. Since the original HODL forum was posted in December 2013, Bitcoin prices are up about 2,500%. Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment. Cryptocurrency and blockchain technology are still relatively untested, and they may not pan out as the revolutionary innovation their supporters envision. There are also times when it may be prudent to sell, such as cashing out some gains when you’ve met your goals.

• By holding stocks for the long term, investors can weather short-term market instability.
• Please see Open to the Public Investing’s Fee Schedule to learn more.
• The HODL community encourages other investors not to cash out of their crypto when prices rise and not to throw in the towel when crypto prices fall.
• 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.

HODLing is often seen as a simple and effective strategy, especially for those who prefer to avoid the stress of daily trading. It’s based on the belief that over time, the value of cryptocurrencies will increase despite short-term price swings, a view held by many crypto traders. 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.

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

HODL helps connect people in the Web3 ecosystem and encourages the crypto community to focus on the positive aspects of blockchain technology. The HODL memes bring levity to stressful situations, and the phrase inspires fellow investors to stay strong when markets decline. All in all, the shared struggles and triumphs of HODLing create a sense of camaraderie among crypto traders. When the markets are unstable, HODLing can be a strategy to consider.

• 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.
• A marketplace for cryptocurrencies where users can buy and sell coins.
• 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.
• But investors who were spooked into selling their BTC in past downturns have lived to regret those decisions.

Crypto forums may preach the benefits of HODLing, but there isn’t definitive proof that it works for crypto investments in the same way it has traditionally worked for the stock market. Crypto investors quickly retrofit HODL as an acronym for “hold on for dear life,” an encouragement to other crypto investors not to sell when prices fall. The term originated from a 2013 online post to the Bitcointalk forum where the typo appeared. The price of Bitcoin in 2013 was volatile at the time, surging to over $950 at the beginning of December, 2013, up from just over $130 in April of the same year. The poster encouraged people not to sell and that they were “hodling” [sic]. HODLing is a sound investment strategy that has been successfully applied even within the traditional markets; however, its efficacy depends on the investor’s goals.

The HODLer History

When a stock or crypto’s price is at its lowest point, investors typically experience fear, anger and panic that can lead them to sell at the worst possible time. Likewise, when a stock or crypto price is at its highest, investors often feel excited and overconfident, prompting them to buy at the worst possible time. GameKyuubi explained in the post that he planned to “hold” his Bitcoin (BTC) investments because he knew he was a bad trader. You don’t have to be a cryptocurrency disciple to learn something from the HODLers. If you believe in the value of your investments, you might be less likely to panic in the face of market turmoil. HODL may also refer to a DeFI token on the Binance Smart Chain (BSC).

• But in general, the idea of investing for long-term, rather than short-term, gains is not a new one.
• People who HODL crypto must believe their preferred coins will gain widespread adoption (or at least have a net increase in value) while remaining calm amidst significant price swings.
• GameKyuubi explained in the post that he planned to “hold” his Bitcoin (BTC) investments because he knew he was a bad trader.
• HODL, or “Hold On for Dear Life,” is now a widely known concept in the crypto community that refers to the strategy of not selling your digital assets, even amid extreme price changes in the market.

That means that you’re missing an opportunity for potential gains in those markets. Jason Porter, senior investment manager at Scottish Heritage SG, says the HODL strategy can be particularly useful for crypto investors during market weakness, such as 2022’s crypto winter. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

What does ‘HODL’ mean in crypto?

Under the post-COVID low-interest context with inflation expectation, investors also hold cryptocurrencies for value reserve. The term ‘HODL’ originated from a post in a Bitcoin forum, where the user accidentally typed ‘hodl’ instead of ‘hold’ during a discussion about trading strategies. The user referred to themselves as an ‘illusioned noob’ who was poor at trading, thus choosing to ‘hodl’ during a period of high price volatility. Yes, the principle of HODLing can also be applied to the stock market. It’s similar to the buy-and-hold strategies used by many stock market investors. The idea is to purchase stocks and hold onto them for a long period, regardless of market fluctuations.

What Is the Difference Between HODL and a Buy-and-Hold Strategy?

As with many other popular memes, the origin of HODL can reportedly be traced back to a typo. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.

Cons of HODLing

The HODL approach has been rewarding for long-term investors in Bitcoin, Ethereum (ETH) and other leading cryptocurrencies, as it’s helped them navigate extreme fluctuations in the crypto market. In no time, the term HODL spread like wildfire throughout the crypto world. Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade. If you invested $1,000 in Bitcoin on the day of the original HODL post, it would be worth much more today. But there are countless people who have lost money trading Bitcoin in the meantime, buying it when it was high and bailing out after a disappointing fall.

Motley Fool Investing Philosophy

But investors who were spooked into selling their BTC in past downturns have lived to regret those decisions. 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. The intention is to create an artificial price increase leading to a substantial profit.

CryptoJelleNL

It can be difficult for even professional traders to time short-term trades. And there are psychological biases that negatively impact investors’ decision-making. The meme also acknowledges novice crypto investors that they are not skilled enough to profit from short-term trades amid the notoriously volatile crypto market. But in general, the idea of investing for long-term, rather than short-term, gains is not a new one. I’LL TELL YOU WHY,” their message read (this time spelling “hold” correctly).

It’s been an interesting journey, one that’s taught me a lot about the value of patience in investing. As a firm believer in the HODL strategy, I apply it to my own investments. Because it’s a relatively new and rapidly growing market, prices are constantly shifting. To protect your investments, it’s essential to know the ins and outs of your strategy of choice before making a purchase. Overall, HODL best suits investors with a multi-year vision for their preferred crypto projects.

However, while “HODLing” might be a good strategy, it doesn’t tell you what to own. Buying and holding a poor investment can lead to years of bad returns, if not a total loss on the investment. The term almost immediately became a meme via social media, and the misspelling hexn.io continues to live on in internet message forums such as the infamous Wall Street Bets board on Reddit. Here’s the origin of HODL and why it can be a valuable investing strategy. Bankrate.com is an independent, advertising-supported publisher and comparison service.

HODL or Day Trade

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That’s good news because it’s not easy to do this, even under the best circumstances. Timing the market requires expertise and a talent for predicting shifts in the market that most regular traders don’t possess. HODL is a misspelling of “hold” and an acronym for “hold on for dear life.” It refers to an investing strategy where you buy crypto with the goal of holding onto it for the long haul, regardless of market conditions. Crypto markets are highly volatile, which means that investors often find themselves second-guessing their decisions. In the short term, if you’re advised to hold, it suggests just hanging tight as all is probably good, so there’s no reason to sell up but it’s also not worth buying loads more just in case things go tits up. If you see the value dipping or surging before your eyes, it can be easy to think that you need to buy more or sell the fucking lot, but you can just breathe…and hold…and hope it all steadies out in your favour.