To HODL Or Not?

HODL is an acronym that stands for “hold on for dear life.”

It is a commonly used cryptocurrency term and a trading technique.

HODL means buying and holding a coin with a long-term view regardless of market instability.

HODL is also a crypto token.

Sometimes the crypto market moves fast, and others move slow. As a trader or investor, you utilize different techniques on your coin for both periods, depending on various factors. One of such techniques is to do absolutely nothing.

In crypto terminology, it is called “HODL.”

What Does HODL Mean?

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HODL translates to "hold on for dear life." It is a popular term used in the cryptocurrency community, and it simply means to hold your coin.

When you HODL, it translates to choosing to keep your crypto coin rather than trade, as it is more likely for you to incur losses when you trade than when you do not trade at all.

HODL suggests shunning trading based on short-term moves in the market, as crypto prices are volatile. This way, you can earn more profit from a possible long-term value increase.


It is a phrase that came about due to a misspelling of “hold” regarding buying and holding cryptocurrency. The term has stuck since then and has become part of daily vocabulary.

But how did it begin?

Origin of HODL

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As we have previously established, HODL originated from a typo of the word “hold.” It came about due to some activities in 2013.

That year Bitcoin's price was highly volatile. It started with about $13 in January, then bumped to $230 in April. In July, a decline occurred when its value went down to $68. By October, it had appreciated $123; then it increased to its year-long highest of about $1200 in December. It kept fluctuating and hit a staggering dip of 39%, from $716 to $438.

This price instability of Bitcoin led to a series of rants on an online Bitcoin forum.

On December 18, 2013, a trader named 'GameKyuubi' posted "I AM HODLING," a drunk typo as he later confessed that he had taken whisky.
It was a post detailing how he wanted to stop trying to time the trade market due to price fluctuations. He further rambled about how wack he was at trading and why it was more beneficial for him to hold onto his Bitcoin from that moment.

He vented on a common problem most traders had; afterward, “HODL” became an internet sensation and became a widely used crypto terminology.

This term became part of pop culture and was referenced in movies like 300, Game of Thrones, and BraveHeart.

Beyond being just a term, the popularity of HODL led to the creation of a coin called $HODL, which can only work on a select smart chain.


HODLing is a trading strategy, and it is simply holding your coin with an optimistic view of increasing its long-term price. Such a move can either bring massive dividends or incur heavy losses for you, depending on how the market goes.

Why You Should HODL

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Cryptocurrencies prices are prone to fluctuation. While that might be a negative thing for investors and traders, it also presents a possible market opportunity for some too.

When you HODL, you aren't at the risk of short-term fluctuation, which can adversely affect your funds. To HODL, in this case, means to buy and keep crypto and not to sell it, and this provides a safer way of trading than other active methods.

Many industry experts have projected that crypto will soar in value as time progresses. Bitcoin has the highest probability of reaching and eventually surpassing the $100,000 mark of all coins. The rest aren't far behind either, which is why choosing to HODL your coin is a sound business strategy.


There are different ways HODLing takes shape. Some of which are:Going days or weeks without looking at crypto prices.When you do not flinch even in the face of a possible government ban on crypto.When you're not moved by get-rich-quick-syndrome with crypto.When you do not make panic sales in the face of price decline. When you do not second guess your decision to HODL.

Why You Should Not HODL

As evidenced by the recent freefall of Bitcoin within the past four months, it is safe to say that holding large amounts of cryptocurrency isn't safe. And this regression isn't just tied to the current market; Bitcoin has an infamous history of high highs and low lows.

From October 2021 till January 2022, Bitcoin’s price had regressed by almost 50%. This has caused unspeakable losses to many who held large amounts of BTC.

Also, since cryptocurrency isn't yet widely adopted by all governments, it faces a mysterious future. Some countries proposed banning crypto at the beginning of the year, while others outright banned it. Imagine what this would have done to crypto holders in this location?

External factors like media influence, public sentiment, government policies, etc., sway the future of crypto. Any negative perception from any of these sources can affect its value on a long-term basis.

These reasons indicate why deciding to HODL your coin isn't precisely the safest trading technique.

Conclusion

The idea behind HODLing is basically to avoid trading based on short-term price moves. The market is highly volatile, so making a long-term trade over a short-term price change sometimes ends up poorly and, on some other occasions, lucrative.

Crypto, mainly Bitcoin, has a long history of being extremely unstable. The price increased by 52,000% from 2011 to 2013, then plummeted by more than 80% over the subsequent year. Since then, it has shot to more than 17 times its prior high, only to fall again by half.

Even with such damning statistics, some industry experts still believe it will keep soaring in value. Others speculate that crypto will one day become the global legal tender. It is for reasons like this that some HODL.

By and large, choosing to HODL can be a seemingly sound business decision or a bad one depending on your thought process. Ultimately, no one can expertly predict the future.



Author: Valentine. A Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
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