HODL is a term derived from a misspelling of “hold” in the context of buying and holding Bitcoin and other cryptocurrencies. It’s also commonly come to stand for “hold on for dear life” among crypto investors. In that case, investors buy when prices are low, hold an asset while the value increases, then try to sell it before the price integrated development environment wikipedia dips. Therefore, traders interested in crypto need to carefully understand what they’re investing in with crypto.

Likewise, when a stock or crypto price is at its highest, investors often feel excited and overconfident, prompting them to buy at the worst possible time. However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. Value investors rely on fundamental metrics like price-to-book, price-to-earnings and price-to-sales ratios to estimate the intrinsic value of a stock. Since the original HODL forum was posted in December 2013, Bitcoin prices are up about 2,500%.

What Does HODL Mean in Crypto?

In other words, market timing is difficult and risky, and making the wrong moves will lock in 5 bitcoin blockchain and defi news paper losses that may otherwise disappear over time. So you buy, you hold on for dear life — hodl — and you build wealth in the long haul. A good strategy, Morrison says, is to have a strong idea of why you’re investing in something when you buy it. And when you’re tempted to sell it, a key question is whether something about your analysis has changed. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website.

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The week the post was published, the price of Bitcoin dipped nearly 40%, as a result of actions taken by the Chinese central bank. Despite the recent high rate of return and the reasons to invest, as mentioned above, prudent investors should also reckon with the risks of holding cryptocurrencies. Investors may have to experience extreme ups and downs of their asset values, which means they should have much larger risk appetites than investors of conventional investment instruments. They must have sufficient capital capacity to avoid forced sales or meet unexpected liquidity needs. Cryptocurrency is a type of digital currency supported by blockchain technology.

Much like the term itself, HODL encourages users to hold onto their tokens for rewards in the Binance coin (BNB) that are distributed every three days. The rewards are generated from taxes collected on transactions made by users, such as sale, purchase, or transfer of HODL tokens. The tax amount is converted into BNB tokens, and a percentage of the gains are redistributed to users from the collective liquidity pool. The prices of Bitcoin and other cryptocurrencies are notoriously volatile, but HODLers disregard even large price swings. HODL culture has been a major help to long-term investors in Bitcoin and other top cryptocurrencies. But critics of HODL culture point out that the mindset only works if the value of cryptocurrencies continues to trend higher over the long term.

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1. And if you’re a HODLer, capital gains aren’t the only way you can make money on cryptocurrency.
2. Cryptocurrency prices are also prone to the movements of whales (a term for people or organizations that hold a very large amount of a particular token).
3. Upgrading to a paid membership gives you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs.
4. GameKyuubi explained in the post that he planned to “hold” his bitcoin (BTC) investments because he knew he was a bad trader.

You can also participate in staking rewards with many cryptos, allowing you to generate income while you continue to hold the digital asset and potentially ride it to new heights. Working with the best crypto exchanges or apps can help you earn the most income from your crypto positions. It’s impossible to argue that long-term Bitcoin HODLers have not done well.

“HODLing is a good approach to Bitcoin investing if you believe in its long-term prospects and are prepared for some volatility along the way,” Turner says. Harry Turner, founder of The Sovereign Investor, says the key to bitcoin’s long-term investing outlook is its leading market position and its fixed supply. Value investors rely on fundamental metrics like price-to-book (P/B), price-to-earnings (P/E) and price-to-sales (P/S) new to bitcoin read this first 2020 ratios to estimate the intrinsic value of a stock. Ben Gagnon, chief mining officer for Canadian-based Bitfarms (BITF), says HODL is more of a mentality than an investing strategy. “HODL can be employed, particularly when the market is declining, to assist investors in avoiding the urge to sell in a panic,” Porter says.

Indeed, the original HODLer in 2013 had no illusions about their ability to play the market. But the post conveyed a confidence that time would improve Bitcoin’s fortunes. HODL claims it is the highest-paying reward token on the Binance Smart Chain Network (BSC). It isn’t easy for Australians to get hold of HODL, and you may have to use an international exchange, which may cost you extra in conversion fees to USD. “I believe this is crucial for new investors because they are more likely to act emotionally or impulsively,” Porter says. For example, Bitcoin shed 50% of its value in less than 48 hours of the Covid-19 pandemic-induced sell-off in March 2020.

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. If you invested $1,000 in Bitcoin on the day of the original HODL post, it would be worth much more today. But there are countless people who have lost money trading Bitcoin in the meantime, buying it when it was high and bailing out after a disappointing fall. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.

For example, bitcoin shed 50% of its value in less than 48 hours of the Covid-19 pandemic-induced sell-off in March 2020. The original crypto plunged to $US4000 before ending the year around $US29,000. Wayne Duggan has a decade of experience covering breaking market news and providing analysis and commentary related to popular stocks.