What Does HODL Mean? Here’s Everything You Need to Know

What is HODL?

HODL is a misspelling of the word “hold,” and is used to describe the act of holding onto a cryptocurrency rather than selling it. Some crypto enthusiasts have even redefined it to mean “Hold On for Dear Life.” 

This reflects the popular belief that cryptocurrency will eventually replace FIAT currency, and those who HODL their coins will be rewarded when this happens.

Where did HODL come from?

The term “HODL” originated on a Bitcoin forum in 2013. At the time, there was a lot of volatility in the BTC market. One forum member named GameKyuubi posted a rant on a Bitcoin Talk forum about how he planned to HODL his Bitcoin no matter what happened.

It soon caught on as a slang term within the cryptocurrency community. These days, you will often see people using HODL in a tongue-in-cheek way to show their dedication to holding onto their coins.

What does HODL mean in crypto?

When crypto enthusiasts use the word HODL, they are likely referring to their general strategy of holding onto their coins for the long term. Below, we break down this investing move that is popular in the crypto world.

What is the HODL strategy?

The HODL strategy isn't simply about holding a cryptocurrency. It is about buying a cryptocurrency and then holding it in the long term, regardless of market conditions. This strategy runs contrary to many investors' natural instincts: sell when the price is high and buy when the price is low.

The rationale behind this approach is that over the long term, the price of most cryptocurrencies will increase as more people adopt them and they become more widely used. Therefore, by holding onto a cryptocurrency, you are likely to see its value rise in time. 

HODLers, or people who HODL, also see this as a pledge to the future success of a cryptocurrency. They believe that cryptocurrency will one day replace fiat currency, and by holding onto their coins, they are helping to make this happen.

Can you HODL other assets?

The HODL strategy can be applied to other assets like stocks, since it is essentially the same as a buy-and-hold strategy. It is just commonly associated with cryptocurrency. This is likely because HODLing a cryptocurrency is a lot riskier than HODLing other assets. 

Cryptocurrencies are highly volatile, which means that their prices can rise and fall very quickly. This makes them a risky investment, but also one with the potential for high rewards.

When should you HODL?

If you believe in the long-term potential of a cryptocurrency, like Bitcoin, for example, then HODLing may be the right strategy for you. Else, this may not be an attractive move for most short-term investors or those who are looking to make a quick profit.

So is this strategy worth adopting? To answer that question, we implore investors always to align their investment choice with their goals and not be swayed by emotion. You could also use historical data to help you make some conclusions - for instance, Bitcoin’s price in 2011 was a mere $1, but it shot to an all-time high of $68,789 in November 2021, according to Bankrate statistics.

When should you sell?

Like most investment choices, there is no best time set in stone when selling a coin that you have been HODLing, and it is entirely up to you. Here are some common reasons HODLers sell their cryptocurrencies:

• They no longer believe in the long-term potential of the coin.
• The price of a chosen cryptocurrency has reached its desired profit level, and they want to cash out.

The bottom line is that you should set your goals as an investor before buying any cryptocurrency and accordingly decide when it’s the best time to sell.

Tips for getting started with the  HODL Strategy

Now that you know what HODL is, you may be wondering how to start. The process is simple. Here are some tips to help you get started:

1. Start with thorough research

As with any other investment option, you have to do extensive research on which cryptocurrency to buy. You will also want to take a look at the team behind the project, their roadmap, and whether the project is worth investing in for the long term. 

If you're still hesitant to invest in crypto, you can start learning the ropes through automated trading with an app like BOTS. We have plenty of bots you choose from - and let algorithms do the heavy lifting for you. All you need is to set your parameters, and they will automatically trade for you.

2. Buy cryptocurrency

If you want to HODL a cryptocurrency, you need to purchase some. This can be done easily enough on most major exchanges. However, crypto trading can be a very tricky business, so make sure you know what you’re doing before putting any money down. You may want to look into automated trading as an option so that bots can do most of the heavy lifting for you.

3. Store safely

Once you have purchased your desired cryptocurrency, you need to store it in a safe place. This is typically done using a software or hardware wallet. Hardware wallets are generally considered the safest option because they are offline and not vulnerable to hacks. But software wallets have their merits too, like being more convenient and easier to use.

4. Monitor the market

Once your coins are stored away safely, the only thing left to do is sit back and wait. In the meantime, you will want to keep an eye on the market so you know when to sell. The key here is to not get FOMO (fear of missing out) and sell your coins when the price is down or panic and sell when the price is volatile. Remember, you are in it for the long haul!

There is no such thing as risk-free trading. It is possible to lose (part of) your stake. Nonetheless, being prepared and trying out tools like trading bots can give traders a better understanding of the cryptocurrency market.

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This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing. 

Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person. 

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