HODL Over­view, Histo­ry, Bene­fits and Risks of HOD­LING

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.

• Bank­ra­te fol­lows a strict edi­to­ri­al poli­cy, so you can trust that we’re put­ting your inte­rests first.
• Back in 2013, someone with the user­na­me GameKyuubi made a post on the Bit­co­in­Talk forum.
• Blind faith in a pro­duct or idea might seem like a poor qua­li­ty for an inves­tor — like some­bo­dy refu­sing to sell shares of Block­bus­ter when Net­flix was first on the rise.
• The cryp­to mar­ket is known for being very vola­ti­le, which can be a big pro­blem and cau­se huge los­ses to cryp­to­as­set inves­tors.
• The first step for a beg­in­ner in the block­chain eco­sys­tem is to find out whe­re all the important con­ver­sa­ti­ons hap­pen, inclu­ding social media plat­forms and chat forums.

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.

HODL or Day Trade

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 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.

Bro­kera­ge ser­vices for US-lis­ted, regis­tered secu­ri­ties are offe­red to self-direc­ted cus­to­mers by Open to the Public Inves­t­ing, Inc. (“Open to the Public Inves­t­ing”), a regis­tered bro­ker-dea­ler and mem­ber of FIN­RA & SIPC. Addi­tio­nal infor­ma­ti­on about your bro­ker can be found by cli­cking here. Open to Public Inves­t­ing is a whol­ly-owned sub­si­dia­ry of Public Hol­dings, Inc. (“Public Hol­dings”). This is not an offer, soli­ci­ta­ti­on of an offer, or advice to buy or sell secu­ri­ties or open a bro­kera­ge account in any juris­dic­tion whe­re Open to the Public Inves­t­ing is not regis­tered. Secu­ri­ties pro­ducts offe­red by Open to the Public Inves­t­ing are not FDIC insu­red.

Is HOD­Ling a good stra­tegy?

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.

• The ans­wer to the birth of this con­cept is the extre­me vola­ti­li­ty that exists in the cryp­to­cur­ren­cy mar­ket.
• At the same time, Bit­co­in­ers use HODL as a form of encou­ra­ge­ment during cryp­to win­ters, lite­ral­ly remin­ding each other to HODL onto their bags.
• “In a zero-sum game such as this, trad­ers can only take your money if you sell,” he wro­te.
• The term ‘flip­pe­ning’ is used within the cryp­to cir­cles to refer to a hypo­the­ti­cal moment in which the mar­ket capi­ta­liza­ti­on of Ethe­re­um sur­pas­ses that of Bit­co­in.

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.

Whe­re did the term “HODL” come from?

In cryp­to, the term is used to refer to indi­vi­du­als or insti­tu­ti­ons with an out­si­zed invest­ment in a par­ti­cu­lar asset. Moo­ning is a rela­ted term to ‘When Lam­bo’ that also refers to stra­to­sphe­ric pri­ce ral­lies. If the pri­ce of an asset rises very fast, the com­mu­ni­ty equa­tes that rise to a ride on a rocket to the moon which gave rise to the phra­se going to the moon or ‘moo­ning,’ for short. Hexn Try­ing to beat the mar­ket by timing rever­sals is an expert’s game, and most new­co­mers to cryp­to are not expe­ri­en­ced at doing that. HOD­Ling thus beco­mes a safe play for such indi­vi­du­als and insti­tu­ti­ons loo­king for long-term gains rather than gam­ing the sys­tem. In the case of Bit­co­in, if you’d purcha­sed and HOD­Led your coins from the start, your pro­fits would be unpre­ce­den­ted.

It is important to know when the right time is becau­se this metric varies from one indi­vi­du­al to ano­ther. The right time to sell will lar­ge­ly depend on the goals of inves­t­ing. If the­se goals are achie­ved, the coin hol­der can sell at any pri­ce in the mar­ket; other­wi­se, they con­ti­nue to HODL. HOD­Ling cam­paigns are also wit­nessed when­ever the pri­ce of an asset starts fal­ling. In such a situa­ti­on, any more sel­ling could lead to fur­ther pri­ce cor­rec­tion and the best action for the long-term inves­tors is to dis­cou­ra­ge weak hands from let­ting go and ther­eby miti­ga­ting fur­ther los­ses.

You’re our first priority.Every time.

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. Long-term cryp­to HOD­Lers stay inves­ted becau­se they belie­ve that cryp­to­cur­ren­ci­es will even­tual­ly replace govern­ment-issued fiat cur­ren­ci­es as the basis of all eco­no­mic struc­tures. Should that occur, then the exch­an­ge rates bet­ween cryp­to­cur­ren­ci­es and fiat money would beco­me irrele­vant to cryp­to hol­ders. FUD is ano­ther acro­nym that stands for ‘Fear, Uncer­tain­ty, and Doubt.’ Part of the reason why cryp­to­cur­ren­cy mar­kets are so vola­ti­le is that they are vul­nerable to public per­cep­ti­ons. When­ever the­re is nega­ti­ve press covera­ge, the value of the enti­re mar­ket will fall and the rever­se is true.

• Avo­i­ding the urge to give in to fear, uncer­tain­ty, and doubt (FUD) is one of the har­dest bar­riers to over­co­me.
• Examp­les of cryp­to­cur­ren­ci­es include Bit­co­in, Ethe­re­um, Ripp­le, etc.
• The­re are also times when it may be pru­dent to sell, such as cas­hing out some gains when you’ve met your goals.
• This form of led­ger tech­no­lo­gy is what’s behind cryp­to­cur­ren­ci­es and other tech trends.

Depen­ding on your invest­ment stra­tegy and risk pro­fi­le, HOD­Ling can be a good approach. Howe­ver, cryp­to mar­kets are high­ly unsta­ble and the­re is no gua­ran­tee that HOD­Ling will be suc­cessful. Even if HOD­Ling doesn’t seem right to you, there’s still les­sons to be lear­ned from this approach. HOD­Lers are a social bunch—their stra­tegy reli­es on sup­port from other inves­tors, who urge them along and con­vin­ce them not to sell if they are fee­ling unsu­re.

How does the Fede­ral Reser­ve impact stocks, cryp­to and other invest­ments?

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.

Best Online Bro­kers for Stock Tra­ding

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.

Our Ser­vices

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.

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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? How a Typo Beca­me a Cryp­to Meme

We are com­pen­sa­ted in exch­an­ge for pla­ce­ment of spon­so­red pro­ducts and, ser­vices, or by you cli­cking on cer­tain links pos­ted on our site. The­r­e­fo­re, this com­pen­sa­ti­on may impact how, whe­re and in what order pro­ducts appear within lis­ting cate­go­ries, except whe­re pro­hi­bi­ted by law for our mor­tga­ge, home equi­ty and other home len­ding pro­ducts. Other fac­tors, such as our own pro­prie­ta­ry web­site rules and whe­ther a pro­duct is offe­red in your area or at your self-sel­ec­ted cre­dit score ran­ge can also impact how and whe­re pro­ducts appear on this site. While we stri­ve to pro­vi­de a wide ran­ge offers, Bank­ra­te does not include infor­ma­ti­on about every finan­cial or cre­dit pro­duct or ser­vice. Our goal is to give you the best advice to help you make smart per­so­nal finan­ce decis­i­ons. We fol­low strict gui­de­lines to ensu­re that our edi­to­ri­al con­tent is not influen­ced by adver­ti­sers.

Regis­ter On Phem­ex Now To Begin Tra­ding

Our mis­si­on is to pro­vi­de rea­ders with accu­ra­te and unbi­a­sed infor­ma­ti­on, and we have edi­to­ri­al stan­dards in place to ensu­re that hap­pens. Our edi­tors and repor­ters tho­rough­ly fact-check edi­to­ri­al con­tent to ensu­re the infor­ma­ti­on you’re rea­ding is accu­ra­te. We main­tain a fire­wall bet­ween our adver­ti­sers and our edi­to­ri­al team. Our edi­to­ri­al team does not recei­ve direct com­pen­sa­ti­on from our adver­ti­sers. Howe­ver, sta­king is only wort­hwhile if you belie­ve your cryp­to will, at mini­mum, main­tain its value.

The Histo­ry of HODL

The­se invest­ments are spe­cu­la­ti­ve, invol­ve sub­stan­ti­al risks (inclu­ding illi­qui­di­ty and loss of prin­ci­pal), and are not FDIC or SIPC insu­red. Alter­na­ti­ve Assets purcha­sed on the Public plat­form are not held in an Open to the Public Inves­t­ing bro­kera­ge account and are self-cus­to­died by the purcha­ser. The issuers of the­se secu­ri­ties may be an affi­lia­te of Public, and Public (or an affi­lia­te) may earn fees when you purcha­se or sell Alter­na­ti­ve Assets. For more infor­ma­ti­on on risks and con­flicts of inte­rest, see the­se dis­clo­sures.

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.

Why “HODL” Cryp­to­cur­ren­ci­es

There’s litt­le sen­se in ear­ning a 10% annu­al per­cen­ta­ge yield if a coin’s pri­ce plum­mets by 25%. Dozens of high-pro­fi­le block­chains now use a Pro­of-of-Sta­ke (PoS) con­sen­sus mecha­nism to vali­da­te tran­sac­tions. On the­se chains, anyo­ne can lock (“sta­ke”) their coins to earn a per­cen­ta­ge-rate reward over time for their help secu­ring the net­work. Sta­king on block­chains like Ethe­re­um, Sol­a­na, or Poly­gon ear­ns pas­si­ve inco­me with mini­mal effort. What star­ted as a typo in an online forum has deve­lo­ped a real mea­ning of its own.