One of the most common buzzwords crypto beginners come across is “HODL”. While HODL is a misspelled form of “hold”, the two words carry basically the same meaning in the crypto universe. HODLing is a popular investment strategy that involves buying crypto and keeping it for the long term.
HODLing allows investors to reduce the risk of losses from the short-term volatility of crypto. This way, they can reap higher returns from the long-term price appreciation of crypto. In theory, the idea of HODLing is less risky than day-to-day trading. That said, Bitcoin HODlers need to know when to sell their assets.
History and meaning of HODL
HODL entered into the crypto dictionary around December 2013 when one Bitcoin Forum member with the handle “GameKyuubi” wrote a post titled “I AM HODLING”. He was sharing his opinion about the Bitcoin market and his intention to hold onto his assets for the long term.
GameKyuub’s misspelled term “HODL” quickly circulated through the cryptosphere, and bingo – HODLing became synonymous with holding onto monetary assets for a longer period instead of making frequent trades.
2013 marked the beginning of a great period for Bitcoin as the world’s first crypto surged in value from $15 in January to more than $1,100 at the end of the year; early HODLers made over 7,000% profits.
So, what is a HODLer in cryptocurrency? A crypto HODLer is simply an investor who buys and keeps cryptocurrencies in expectation of better returns in the future.
HODlers save themselves from the headache of FOMO (fear of missing out), which often pushes people to impulsively buy high and sell low.
What does HODL mean in stocks?
In the context of stocks and investments, HODL is an acronym that stands for “Hold On for Dear Life”.
Crypto investors should understand the risks of holding cryptocurrencies. It helps to have sufficient capital if you want to HODL your crypto for longer periods.
HODLer meaning and why people “HODL” their crypto
Powered by blockchain technology, cryptocurrencies are digital currencies that function as a means of payment, medium of exchange, and investment products. Decentralized cryptocurrencies namely Bitcoin, Ripple, and Ethereum are not regulated by governmental authorities such as central banks.
The world’s crypto industry has been growing sharply in recent years with Bitcoin witnessing a record surge in value in 2021. Crypto continues to gain more attention as they create investment opportunities to make money online by trading digital currencies.
Decentralization coupled with the high volatility of crypto provides room for growth. Following Covid-related inflation, some investors dived into crypto for value reserve.
The concept of HODLing refers to the act of buying and holding crypto for extended periods hoping to make a profit when the price increases appreciably over the long term. As opposed to HODLers, day-to-day traders are more interested in short-term benefits as they prefer to buy crypto at low prices and sell it at higher prices.
Experienced crypto investors who understand the trends of the crypto market take advantage of volatility to build up their wealth. HODLing provides safety to investors as it protects them from rapid price fluctuations (buying high and selling low).