HODL – the typo that became an investment strategy

You’ve probably been hearing people HODL stocks and crypto lately. The latter’s more famous nowadays as the trend spreads around the world. Still, investors have relied on the same strategy, HODL!

First, let’s talk about how the term “HODLing” became famous crypto lingo. Then, we’ll discuss why people like this approach even when the market is down. More importantly, we will explain when investors should HODL or not.

Nowadays, more people are adopting bitcoin and other cryptocurrencies. If it’s your first time investing, this could help you manage your first coins. For experienced investors, this could improve their portfolio strategy.

What is HODL?

The four-letter acronym means “hold on for dear life.” However, it didn’t start like this. HODL started as a spelling error from a BitcoinTalk thread named “I AM HODLING.”

A trader named “GameKyuubi” was ranting about why he holds his bitcoin. He admitted that he does it because he’s a bad trader.

HODL has since become a rule of thumb in the crypto market. Its followers hold their coins no matter what happens to the price of bitcoin.

Meanwhile, it’s called a buy-and-hold strategy in the stock market. Still, they worked similarly. They rely on the long-term growth of their assets.

Why HODL stocks or crypto?

Whether you invest in stocks or crypto, FUD is always around. Investors always dealt with Fear, Uncertainty, and Doubt. After all, lots could go wrong with their investments.

This is especially true for cryptos. Most people know the market for its high volatility. The prices moved almost every second. In response, the media often reports bad news on digital assets.

First-timers often panic when they see these. Then, the pressure mounts when they see the red lines dropping. They look at the steep price drop and think of cutting their losses.

Then, they quickly sell their coins. They believe they stopped losing money from digital currency. Later, they get into social media and rant about everything crypto.

Sadly, they fail to realize that you only lose money if you sell. As long as you hold the coins, they will eventually grow in value. This is the principle behind the HODL strategy.

HODL fans believe in bitcoin’s long-term growth. They see that short-term changes aren’t important. Hold the coins long enough, and the price of bitcoin goes up in the long run.

Experts say HODLing has been profitable for 99.9% of the days it’s been around. If you bought an amount of bitcoin worth $1,000 in 2009, it would be worth tens of millions now!

Why does crypto have long-term growth?

HODLers don’t blindly believe in cryptocurrency, though. It has the hallmarks of a great investment. It has many uses and numerous backers in the public and private sectors.

People often think of crypto as internet money. Yet, most of them fail to see the blockchain technology behind it. Blockchain has far more applications outside finance.

What’s more, companies and governments are noticing this potential. That’s why they have poured billions of dollars into adopting cryptos!

While there are thousands of duds, there are real gems in the market. Investors always look for new coins to HODL. Here are some examples:

• More companies want crypto as a payment method – Apple recently tweeted that it’s looking for a business development manager with crypto experience. Soon, people may be able to buy Apple products with bitcoin.
• Ethereum has a chance to top bitcoin – Ethereum (ETH) is the #2 crypto right now. It allows non-fungible tokens and smart contracts that have plenty of uses. This is why ETH fans believe it will replace bitcoin as numero uno.
• Ethiopia is investing in Cardano – Investors don’t HODL bitcoin only. Coins like Cardano (ADA) have long-term potential too. Ethiopia plans to use its blockchain to monitor student performance.
• NFTs are popular in the art world – NFTs allow people to have a one-of-a-kind copy of digital art. Due to the pandemic, Art Fair Philippines recently featured NFTs.
• People are now playing NFT games – Axie Infinity is a video game where people play with NFT characters. More importantly, it lets players earn while having fun. Many Filipinos are playing to earn extra cash nowadays.

When should I HODL?

You should find other coins to HODL besides bitcoin. You could follow this approach with other investments like stocks. After all, some of them can grow in the long term.

How do you know which ones to hold, though? Investors follow several ways to find worthwhile additions to their portfolios, such as:

• Research! – Learn more about how investments work. This will help you choose the best ones. Match your picks to your current situation and economic factors.
• Follow updates – Before you HODL stocks or cryptos, check the news. Learn how recent events could affect them. You may find new options as well. For instance, Cypherpunk holdings let people invest privately. It even announced its new CFO on April 14, 2021.
• Check the charts – See if your investments stood the test of time. You may check their previous performance online. It could give you an idea of their future growth.

When should I stop HODLing?

The way of the HODL isn’t foolproof. Sometimes, people have to let go of their investments. Many things could happen that could sour a once-promising option.

Cryptos have a bright future Yet. Some coins will not make it. Learn when to stop HODLing with the following tips:

• Keep calm and avoid FUD – It’s alright to worry about your investments. Still, you need a cool head when assessing your coins or stocks. Otherwise, you can’t make proper decisions.
• Drop coins that have no purpose – Some people buy certain cryptos because of hype. Many coins start like this, but you should check if there’s more to them. Dogecoin (DOGE) started as an internet meme. Now it’s taken seriously as Elon Musk hinted at improving this meme coin.
• See if it’s on the major exchange platforms – People get their cryptos on sites like Binance and Coinbase. Coins on their listings are likely to increase in value. If the biggest platforms drop your coins, maybe you should too.

Final thoughts

Knowing when to buy or sell your investments depends on you. It’s good to know the latest trends. This helps you learn more about the market. However, don’t follow them immediately.

Investors HODL stocks or cryptos not because they oppose the mainstream. Rather, they understand that they hold coins with huge potential. That’s why some call themselves “diamond hands.”

Learn all you can about investing before you start. Be clear on what you want from your investments. This will help you stay the course guided by sound decisions.

Learn more about HODL

What does HODL mean in stocks?

It means “hold on for dear life.” It’s more commonly known as a buy-and-hold strategy in the stock market. Investors ignore short-term price dips and focus on long-term growth.

What is HODL in crypto?

The term means “hold on for dear life.” Investors who follow this strategy don’t sell their coins despite sudden price decreases. They keep holding on for long-term growth.

Is it worth holding onto Bitcoin?

If you have bitcoin, it’s best to keep them in your crypto wallet. The world’s adopting cryptocurrencies quickly. Soon, you’ll have lots of uses for your bitcoin and other cryptos.

Disclaimer: This article is the author’s personal opinion, differing from the “official” statements or facts. All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by Inquirer.net constitutes an investment recommendation, nor should any data or content published by Inquirer.net be relied upon for any investment activities.

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