What Does HODL Mean In Crypto | The Key Takeaways Of HODL

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If you want to set your foot in the world of cryptocurrency as an investor you will get to know there are so many people around you who also like to join crypto as an investor like you. Since 2009 many investors are using the platform cryptocurrency. We do not know about it and its working procedures.

Crypto is a peer-to-peer payment system that is completely digital. It does not have faith in banks and other mainstream financial institutions. You can only use it online and you have to store the coins in your digital wallet. It is named so because the transactions between wallets and in public ledgers are encrypted for verification. There are some popular followers like Bitcointalk of crypto. The Bitcoin creator Satoshi Nakamoto introduced it. He has also created a community called the crypto community where the users can discuss all the things about crypto. The industry developed very much for crypto and new terms were set up by this. HODL is one of the most popular terms among them in the crypto community. The meaning of this term is to hold on for dear life. As an investor, you should know what HODL means in crypto or What Is Fud.

In this article, we are going to discuss this most popular term HODL and what HODL means.

The Key Takeaways Of HODL:

  • The four-letter term HODL comes from a crypto investor who misspelled the word hold. It has become a trendy saying among the investors of crypto. The word HOLD means hold on for dear life. The term defines a buy-and-hold strategy. 
  • In the stock market, there is a full-proof track record of buy and hold. According to crypto users, the buy and hold strategy will be very much beneficial for them. Though there is no track record to display it is just a wait-and-see process.
  • Every investment has several positive aspects as well as some negative aspects. The cryptocurrencies HODL approach is not beyond it. It has also some pros and cons. Every investor should know them very well before making an investment in cryptocurrency.

The History Of HODL: The term HODL has come in a way that is for the typing mistake of the word hold. The crypto community then added an acronym which is “ hold on for dear life” for the term HODL.

A Bitcoin user GameKyuubi became very disappointed when there was a significant fall in Bitcoin suddenly. Then he shared a post in caps that us I AM HOLDING and he busted out his frustration telling us that he is not skillful enough for trading and that he was not able to identify the issue when the market deviated. Later he confessed that he was drinking some whiskey at the time of saying all these for which he might have misspelled the world hold for HODL.

The term spread like a flame within a very short time. It became a meme and bring the movie Braveheart as a reference. It became very much popular with the traders and they share it with other traders. The phrase “hold on for dear life” is trying to say that we have to hold onto digital assets despite the movement of the market with a motive that they will display profits. When the market crypto is unstable the term HODL is used by the crypto community to encourage the traders so that they can gain enough strength to face the issue. In this way, the word gained so much popularity in a very short period

The Strategy Of HODL:

The Strategy Of HODL

Crypto is an extremely unstable market. There are always ups and downs in the crypto market. So if you want to invest in crypto it may have a high risk. The HODL strategy is a widely known means for those traders who have a fear of missing out or FOMO and those who have fear, uncertainty, and doubt or FUD who can not make a good decision at all. They try to hold on through the ups and downs.

The strategy of HODL is not about to time the market to sell once it falls, it means taking the opportunity of increasing value over time.

The Positive Aspects Of HODL Strategy:

We are all known for the fact that every investment has not only benefits but also some risks. Cryptocurrency also has some benefits as well as risks. The International money exchange mediums do not accept this. It may have some safety issue as the people who invest does not have the assurance that their invested amount will increase in price. You have to keep in mind the positive and negative aspects of the HODL strategy very well. They are as follows:

Positive Aspects:

Reliability on market timing:

The strategy of HODL is to hold assets over the long term. It signifies that the investors of cryptocurrency do not have to wait for the time when the market will profit. If the investors rely on the timing of the market they must have a good ability to foresee the changes in the market. We are not so much proficient in doing all these.

Runs With A Buy-And-Hold mindset:

According to the financial advisers buy and hold strategy is a more beneficial way over the long term. The cryptocurrencies like Bitcoin still now run on this strategy.

Lessen Capital gain tax:

If you want to lessen capital gains you have to hold an asset for more than one year. If you hold an asset for one or more years you will be charged a lower tax rate on any earnings.

Negative Aspects:

Does not have any proven records:

As crypto is a completely new platform we can not look back to the time and review its overall performance. When you are investing in stock the buy and hold strategy will work very fruitfully. We have no past historical records that will help us to make out whether the strategy is beneficial for crypto over the long term.

Does not have profit in trying up capital:

Compound interest can help us to increase the value of our money while we invest our money in stocks for a long period. But we do not have any knowledge of whether it will be the same for cryptocurrency. Your money can earn a diversified portfolio of stocks, bonds, exchange-traded funds, and mutual funds while it is knotted in the unknown of crypto.

The Time Of HODL:

There are no hard and fast rules available for holding and selling in crypto but it is the investor who can only decide this considering their aims or purposes. We have proofs that the prices of crypto are highly affected by the news of the world and events. So if you want to buy and hold in crypto it may not be able to give your certain outcomes and there is no assurance that it will produce profit or not.

If you adopt the HODL strategy and buy miscellaneous investments it will be a good strategy. It does not matter what you invest. If there is a sudden fall in one type of investment the other investments may do well. So you will be able to reduce your losses.

If you invest in crypto it might be risky for you just like stocks, bonds, mutual funds, ETFs, etc. So before making an investment or taking your decision you should once review the market and do the necessary research for a better experience.

HODL Coins:

The cryptocurrency was introduced first in 2009 with the name Bitcoin. It was the first digital form of payment that uses Blockchain technology. Without using financial institutions like banks you can make peer-to-peer lending by using this technology. Blockchain is supposed to be a digital community record where you can jeep your transactions along with their ordinary identifier which is called a hash.

You should know that Bitcoin is not the only type of cryptocurrency. There are more types of cryptocurrency that are getting available.

Can I HODL Stocks:

It is true that the term HODL is very much popular in cryptocurrency. But the but and hold strategy of HODL is portrayed in all investing areas like stocks. Several investors make out that the price can sometimes rise and fall, they can fluctuate over time. They get emotional to see those alterations for which you can not reach your goals.

On the other hand, the strategy is very good for us. Your emotions and fear will be gone when you put the blinders on and ignore the chatter. It may be difficult but if you do not want to take risks you have to do this.

The Advantages Of HODL:

If you want to take a decision on whether HODL is right or not you can only know the answer after considering your purposes. Usually buy and hold strategy is a profitable approach. The pros of it are as given below:

A hands-off means invest

You do not need to think of the sudden changes in the market when you want to buy and hold. You do not need to be cautious about each movement and try to find out the perfect time for selling.

Easy decision making

By keeping yourself away from the fear and uncertainty of the investors who try to time the market you can see and assess to take more perfect decisions about your investments and aims. 

Enables time to work in favor of us

Time is a profitable factor when you think of any investment. If the market price falls suddenly it will get an opportunity to hike again. If you give some time to your investment it will provide you with a better outcome.

Changes mindset about investment

When you do not want to time the market to sell you can take a better decision through it.

FAQ:

Is it good to HODL in crypto?

If you HODL in crypto the number of your possessions in cryptocurrencies will not increase. You only win when the price of crypto increases. So it is good to HODL in crypto.

Is HODL a good investment?

By investing through the strategy of HODL the investors can avoid the risk of buying at a high price but selling at a low price. So indeed HODL is a good investment.

Why do the investors of crypto say HODL?

The investor of crypto says HODL which stands for hold on for a better life refers to a strategy of holding into bitcoin holdings through its different price instabilities and fluctuations.

Conclusion:

The term HODL which means hold on for dear life has become very much popular in the crypto community. The buy and hold strategy which is long term gives you time to take a perfected decision being practical, not emotional.

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