If you want to set foot in the world of cryptocurrency as an investor, you will get to know that there are so many people around you who also like to join crypto investors like you. Since 2009, many investors have been using the platform’s cryptocurrency. We do not know about it or 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. The Bitcoin creator, Satoshi Nakamoto, introduced it. He has also created a community called the crypto community, where users can discuss all things crypto. The industry developed very much for crypto, and new terms were set up by this. HODL is one of the most popular terms 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 the most popular term, HODL, and what HODL means.
Table of Contents
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 crypto investors. The word HOLD means to hold on for dear life. The term defines a buy-and-hold strategy.
- In the stock market, there is a foolproof track record of buy and hold. According to crypto users, the buy-and-hold strategy will be very 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 cryptocurrency HODL approach is not beyond it. It also has 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 such a way that for the typing mistake of the word hold. The crypto community then added an acronym, “Hold on for dear life,” to the term HODL.
A Bitcoin user, GameKyuubi, became very disappointed when there was a sudden fall in Bitcoin. Then he shared a post saying 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 word hold for HODL.
The term spread like a flame within a very short time. It became a meme and brought the movie Braveheart as a reference. It became very popular with the traders and they shared 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 the 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
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 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:
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 and hold strategy is a more beneficial way over the long term. Cryptocurrencies like Bitcoin still 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. Capital gains, as well as capital losses, are not as complicated as they’re oftentimes made out to be. In fact, accounting for it in your tax return is quite simple. At this point, most tax programs are fully equipped to handle crypto taxation and will usually walk you through the process in an easy, user-friendly process.
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. 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 proof 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 you 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 making your decision you should once review the market and do the necessary research for a better experience.
The cryptocurrency was introduced first in 2009 with the name Bitcoin. It was the first digital form of payment that used 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 keep 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 becoming available.
Can I Hold the HODL Stocks
It is true that the term HODL is very much popular in cryptocurrency. However, the buy-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 make 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 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 make 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 make a better decision through it.
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.
The term HODL which means hold on for dear life has become very popular in the crypto community. The buy and hold strategy which is long term gives you time to make a perfect decision being practical, not emotional.