If you spend time talking to cryptocurrency enthusiasts, you may have been told to HODL your bitcoin. HODL means “Don’t sell your cryptocurrency!” But why not just say hold, and where did the term HODL come from?
What is HODL?
The term HODL originated from a forum post in 2013 written by Gamekyuubi. This user, clearly intoxicated, titled his post “I AM HODLING.” He meant to title his piece “I am holding,” and this was far from the only spelling error in his post.
See more: How to trade crypto successfully
Although just a spelling error at the time, HODL has become an ideology for many crypto investors. In the post, the author rambled about how you can’t lose your cryptocurrency to the market if you don’t trade it. At the time, Bitcoin traded for only $100.
Investors who took this advice in 2013 bought Bitcoin in the 3-digit range and have HODLed their bitcoin ever since. Each bitcoin these HODLers own is now worth over $44,000.
Understanding the ideology of HODL is simple: Hold on for dear life – don’t sell. As explained in Gamekyuubi’s forum post, if you’re not an experienced day trader, then you’ll likely lose your cryptocurrency to the market.
HODL is a verb, and it can be used the same way as the word “hold.” The biggest difference between someone who HODLs bitcoin and someone who holds bitcoin is their ideology. HODLers are bitcoin holders to the max – holders who won’t sell their investments because they believe that cryptocurrency is the future of finance.
HODL as a Strategy and Philosophy
If you really believe in Bitcoin and aren’t an experienced trader, you should HODL. If Bitcoin does become a mainstream commodity like precious metals, then each bitcoin will trade for 6 figures. Because 21 million bitcoin will ever circulate, the price will continue to rise as long as more people and institutions recognize Bitcoin as a store of value.
Maybe you are interested: How To Delete nftgamef.com Account- A Quick Step-By-Step Guide
With Tesla CEO Elon Musk recently announcing that Tesla has added $1.5 billion of bitcoin to Tesla’s balance sheet, more corporations will likely consider Bitcoin as a valid reserve asset. If Bitcoin becomes a mainstream reserve asset, HODLing your cryptocurrency could give you massive returns.
HODL in the Media
You’ll find the word “HODL” used often on Twitter. If you follow tech gurus like Tyler Winklevoss, you may have seen the term before. This month, Tesla CEO Elon Musk has tweeted about the term HODL tweeting: “Hodl the rainforests!!” Although “hodl” typically isn’t used outside of crypto investments, Musk means “Don’t sell off the rainforests!”
Knowing When to HODL
You should HODL if you aren’t confident you can beat the market by trading your cryptocurrency. If you believe in Bitcoin, its future price potential makes swing trading crypto much riskier.
Investors who shouldn’t HODL include swing traders and short-term investors. Some investors buy crypto during bull markets to try and make quick profits, even if they don’t believe in the long-term sustainability of cryptocurrency.
You want to accumulate Bitcoin during bear markets. Historically speaking, Bitcoin dips down between 80% to 90% each bear market, but then returns to break all-time highs years later. Over the past decade, Bitcoin’s price has risen an average of 200% annually, proving a profitable HODLers’ strategy.
That being said, nobody knows where the price of Bitcoin is headed. To get a sense of Bitcoin’s price trend since its inception, it’s good to use a logarithmic chart to account for volatility. Each candlestick in the chart below represents 1 month of Bitcoin’s price – the long-term trend makes a convincing case for HODLing.
Become a HODLer
The best part about becoming a HODLer: It’s easy. All you need to do is set up a crypto brokerage account and purchase bitcoin, then just HODL.
Maybe you are interested: Tạo ứng dụng blockchain đầu tiên với C – Thảo Trịnh
Planning to invest a lot of money in cryptocurrency? You should purchase a hardware wallet. A hardware wallet stores your crypto on a physical device not connected to the internet so it’s impossible to hack.
Some good choices for crypto exchanges include Coinbase, eToro and Gemini. These exchanges offer mobile apps so you can manage your cryptocurrency on the go. All 3 of these platforms have simple user interfaces, so they’re great for beginners.
How are HODLers Supposed to Know When to Sell?
You should base when to sell your bitcoin on your goals as an investor. In general, you’ll find 2 types of Bitcoin HODLers, both with their own sets of goals. Both types of HODLers aren’t just bitcoin holders, they are long-term believers in Bitcoin and truly think each Bitcoin will be worth 6 figures or more down the line.
“When Lambo” HODLer
The term “when Lambo” is a cryptocurrency joke used when discussing the price of bitcoin. When Lambo just means “When could I get a Lamborghini?”
“When Lambo” cryptocurrency HODLers base when to sell their bitcoin on if they can afford a Lamborghini with their investment.
“Bitcoin Maximalist” HODLer
Bitcoin maximalist HODLers truly believe bitcoin is the future of finance. They won’t sell their bitcoin because they are sold on the idea of a decentralized financial system and only 21 million bitcoins ever being minted. If bitcoin ever were to take over the financial system, Bitcoin would be worth millions of dollars.
Is HODLing Legitimate?
You must be thinking that HODLers need to manage their expectations. The price trend makes a convincing argument for a more expensive bitcoin, but it’s a radical claim that it will hit anywhere near $1 million anytime soon.
At the end of the day, HODLers are just people who really believe in bitcoin. To many HODLers, holding bitcoin is more than just an investment. Since HODLers believe that cryptocurrency is the future of finance, HODLing crypto in its infancy makes them feel part of something revolutionary.
Maybe you are interested: Cryptographic Modules – Pomcor