The crypto sector is filled with jargon that was once reserved for forums and chat rooms. Nowadays, you’ll find all kinds of slang used on crypto-related topics, from abbreviations like FOMO to ambiguous phrases like mooning and diamond hands. But perhaps the most commonly used abbreviation has to be HODL, and its story is one we’ll be looking at today.
Whether you’re a seasoned crypto investor or just getting started, understanding these popular crypto terms can help you navigate cryptocurrencies’ often complex and ever-changing world. So, let’s dive in and explore the fascinating story behind this crypto slang and the HODL strategy.
Who Said HODL First?
If you’re new to the cryptocurrency industry, you might have heard the word “HODL” and been confused about what it means. A comical misreading of the word “hold” gave rise to the popular crypto industry slang term “HODL.”
The misspelling was the work of a forum user GameKyuubi, who went on a rant about various trading strategies back in 2013. His commentary was prompted by Bitcion’s volatility at the time, with prices reaching as low as $950 at the time of writing his post. In a long and misspelt rant, GameKyuubi shared that his idea of being a good trader is to keep “HODLing” your Bitcoin until prices go back up. It wasn’t long before the internet was swarming with HODL memes – it literally took an hour for them to go viral.
Since then, the phrase has taken on a life of its own and evolved into a well-liked cryptocurrency investment technique and a token of the same name. So the current question is – to HODL or not to HODL? Let’s look at the HODL strategy in more detail to help you decide.
Why HODLing Can Be a Smart Strategy
HODLing can be a wise long-term investment strategy for several reasons. Even though many investors would prefer to purchase and sell cryptocurrencies according to momentary market changes, many would rather hold on to them.
First off, there is a history of short-term volatility and unpredictability in the world of cryptocurrencies. By HODLing, traders may focus on the long-term potential of their investment rather than the stress of trying to forecast short-term price swings.
Traders frequently get panicked when crypto is at its lowest point, and this can cause them to sell their digital assets. Similarly, when a price is high, investors become overconfident and purchase an asset at the worst possible time.
HODL is a great strategy investors can employ during low market points and resist the urge to sell their crypto. It’s a beneficial tactic for new investors who are not used to the rise and fall of crypto prices.
The global popularity of cryptocurrencies is going up quickly. Cryptocurrencies’ value will likely peak over time as more people use and invest in coins. Investors can profit from the rising demand for cryptocurrencies through HODLing. But how does one HODL efficiently?
How To Start HODLing Effectively
If you think HODLing is the right long-term strategy for you, there are a few things you need to know if you want to apply it effectively.
To start, you need to select the right cryptocurrency for you carefully. As you probably already know, Bitcoin is the most popular crypto, followed closely by Ethereum, and both have a long track record of growth. Of course, there are hundreds of other options to choose from and consider nowadays.
If you are serious about HODLing, developing a long-term mindset is necessary. HODLing requires dedication and self-control. You are likely aware of the risks involved with crypto trading, so remember that HODLing won’t bring you a guaranteed profit. There are no assurances that your investment will come through. These concerns, paired with short-term market fluctuations, can cause stress among crypto traders. Make it a custom to check the Fear and Greed Index often to judge market trends better and focus on the long-term potential of your investment.
Lastly, make sure to research ways of storing your cryptocurrency safely. Crypto is a common target for fraud and theft, so securing it should be one of your primary concerns.
Whether you are a new or seasoned investor, you can seek assistance with crypto research, market insight and crypto storage with the help of trading platforms or intermediaries such as Bit AI Method. The latter connects interested traders with versatile crypto brokers who monitor the markets 24/7. To top it all off, they connect you to simple-to-use, top-notch tools and information that give you the edge when investing in crypto. With platforms like this in your repertoire, you are one step closer to developing an effective HODL strategy.
Ups and Downs of a HODL Portfolio
Of course, as simple as HODLing may appear, it does have several advantages and disadvantages that you should consider if you are serious about implementing this strategy. Here are some ups and downs of a HODL portfolio:
Pros
Over the years, investors who have HODLed their crypto discovered a number of perks associated with the “hold on for dear life” methodology:
| Possibility for Substantial Returns | When the asset’s market value rises over time, HODLing may eventually produce significant profits. |
| Low Transaction Costs | As opposed to active trading, HODLing has low transaction costs because the investor purchases and retains the asset for a long time. |
| Minimised Stress | Hodling requires less monitoring and tracking of daily price swings, which lowers investors’ stress levels. |
| Tax Benefits | Long-term investors may be eligible for tax benefits in some jurisdictions, including lower capital gains tax rates. Do consult a professional to get factual information on crypto taxation in your country. |
Cons
Where there are perks, there are drawbacks, and the HODL strategy is no exception. As a responsible investor, it’s important to consider the drawbacks of a HODL portfolio too:
| Fluctuation | The cryptocurrency market is highly volatile and is often prone to sudden price changes. Hodlers may suffer huge losses as a result of this volatility. |
| Limited Diversification | The risk of losses is increased in a HODL portfolio that just holds a single type of asset and lacks diversification. |
| Buzz-Inspired Investments | Investments that are hype-driven might be problematic because many individuals buy cryptocurrencies without fully understanding their fundamentals. |
Overall, a HODL portfolio has the potential to generate significant returns over time, but it is critical to weigh the risks and benefits before investing. To benefit from the HODL strategy, investors should carefully consider their risk tolerance, diversify their portfolio, and have a long-term investment plan.
The HODL Coin
Sometimes “HODL” can refer to HODL Coin, a token part of BSC (Binance Smart Chain). It was created back in May 2021. When trading HODL Coin, an automatic charge of 10% is applied to the transaction. This 10% is then converted into BNB, which is, in turn, transferred as a reward for holders who don’t sell HODL Coin and keep it in their wallets. While this may seem like an attractive way to ensure yourself some passive earnings, the price of the HODL Coin has dropped significantly, and traders are yet to benefit from the token.
More Crypto Slang Terms You Should Know
HODL is just one example of the multitude of words, abbreviations and phrases that have cropped up in conversations among traders and influential crypto figures. While we can write a separate article uncovering the ‘etymology’ behind each word, we don’t want to leave you hanging, so here is some must-know crypto slang:
- Ape – an individual who purchased a coin, token or NFT shortly after its release.
- DYOR – something we strongly preach to – do your own research!
- FOMO – stands for “Fear of Missing Out” in the crypto industry, it refers to an investor’s concern that they might miss out on a profitable opportunity.
- FUD – literally stands for “fear, uncertainty, doubt” and refers to the psychological strategy used to persuade someone to hold an unfavourable opinion of something.
- Mooning – used to describe the proposed rise in the price of a cryptocurrency.
- Diamond Hands – HODLing with tremendous persistence despite market collapse.
- Hold the Line – a phrase used to encourage other investors to hold firm in the face of market volatility.
Of course, it’s only a matter of time before a new slang term pops up, so keep your eyes peeled for the next big phrase that goes viral. Who knows, they might name a popular token after it too!
Conclusion
The phrase “HODL” may have started as a typo in a Bitcoin forum post, but it has since grown to be a well-known investing tactic in the world of cryptocurrencies. Long-term holding of stocks has always been a wise course of action, but HODLing goes a step further by advising investors to resist the urge to sell during market gyrations. HODLing has clearly assisted many investors in weathering market downturns and achieving long-term gains, albeit there may be better strategies for everyone. We’ll keep an eye on whether the HODL strategy continues to be a common tactic among investors as the Bitcoin market develops – and you should too.
