The same philosophy should work for high-quality cryptocurrencies as well. Even a long-term cryptocurrency investor would be well-served to articulate clear goals and to monitor the emerging space for systemic risks. 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.

1. There are also times when it may be prudent to sell, such as cashing out some gains when you’ve met your goals.
2. The devotion among HODLers comes from the culture surrounding Bitcoin and other cryptocurrencies, says David Duong, head of institutional research at the cryptocurrency exchange Coinbase.
3. It’s impossible to argue that long-term Bitcoin HODLers have not done well.
4. Bitcoin and most other cryptocurrencies are based on a technology called blockchain, which has many uses, including a way to safely and anonymously make payments over the internet.
5. The misspelled term “HODL” circulated quickly in the forum and spread to other cryptocurrencies.

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Before investing, review the company’s standing, looking at things like earnings and sales, vision and background of management, and the overall status of the industry. The exact origin of HODL is well established, and the context surrounding it offers a good lesson to cryptocurrency traders and those who would like to get started setting the environment variables in heroku complete python web course trading crypto. The term HODL emerged from a 2013 message board post on the Bitcointalk forum as an errant misspelling. HODL is one of those terms that’s shown up amid the rise of cryptocurrency. While it looks like an acronym — one of those terms like FBI or KFC that abbreviates a word into its initials — HODL is simply a misspelling of the word hold, albeit one that caught on for the silliness of its mistake.

It often refers to retaining crypto assets that you own for an extended period, even throughout a highly volatile market movement. “Hodl” is meant to encourage people to not impulsively sell when a cryptocurrency drops dramatically or rises to become highly profitable to sell. Bitcoin has only been around since 2009, giving it a limited long-term track record compared with stocks, bonds, property and other assets. Others have argued that the stubbornness and close-mindedness of HODL culture is “cult-like”, blinding the community to any legitimate criticisms of Bitcoin as an investment or a currency. In no time, the term HODL spread like wildfire throughout the crypto world. Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade.

Since its debut in 2009, Bitcoin’s value has climbed from just pennies to more than $70,000 at one point. So, a long-term buy-and-hold approach would have returned traders many times their initial investment, because the strategy prevented them from selling when things got tough. With a relatively short history compared to other types of assets and fiat currencies, cryptocurrencies face a future with lots of unknowns.

Risks of “HODLING” Cryptocurrencies

Ben Gagnon, chief mining officer for Bitfarms, says HODL is more of a mentality than an investing strategy. The term almost immediately became a meme via social media, and the misspelling continues bitcoin and cryptocurrencies 2020 to live on in internet message forums such as the infamous Wall Street Bets board on Reddit. An introduction to cryptocurrencies and the blockchain technology behind them. Learn how to buy Reddit stock and what you should know before investing in the recent social media IPO.

The devotion among HODLers comes from the culture surrounding Bitcoin and other cryptocurrencies, says David Duong, head of institutional research at the cryptocurrency exchange Coinbase. You’re scrolling through social media, and you encounter someone saying that they’re “HODLING” or telling someone else to “HODL.” Confused? Here’s what the word means in the world of cryptocurrency what is cryptocurrency and finance—and why it’s not misspelled. Bitcoin’s extreme volatility has produced a handful of horrendous annual returns throughout the years.

Why Do They Say HODL Instead of Hold?

The volatility is more extreme, but the long-term gains have been quite appealing. 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. But according to financial planners and analysts, it’s also a rational response to a market whose ups and downs are exceedingly difficult to predict. GameKyuubi explained in the post that he planned to “hold” his bitcoin (BTC) investments because he knew he was a bad trader.

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Based on these principles, the best time to HODL is now, always, and forever. A true believer would always hold on to their tokens, even if markets crash or become extremely volatile. HODLing becomes an ideological belief about the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them. The term originated from a 2013 online post to the Bitcointalk forum where the typo appeared. The price of Bitcoin in 2013 was volatile at the time, surging to over $950 at the beginning of December 2013, up from just over $130 in April of the same year. The poster encouraged people not to sell and that they were “hodling” sic.