In reality, you’re better off selling some cryptos before they burn too much of your money. It’s essentially the opposite strategy from day traders trying to maximize their cryptocurrency profits on a short-term basis. Cryptocurrency and blockchain technology are still relatively untested, and how to buy ecash they may not pan out as the revolutionary innovation their supporters envision. There are also times when it may be prudent to sell, such as cashing out some gains when you’ve met your goals. But in general, the idea of investing for long-term, rather than short-term, gains is not a new one.

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Bitcoin has only been around since 2009, giving it a limited long-term track record compared with stocks, bonds, real estate 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.

Risks of “HODLING” Cryptocurrencies

The price of Bitcoin began another surge in mid-2017 and reached a historic high of $19,167 at year-end. However, the price fell again after the 2017 surge; it hiked again during the COVID-19 pandemic and hit a new high of over $58,000 in early 2021. The price surged from $15 in January of said year to over $1,100 at the beginning of December, which delivered a return of 7,230%. With a high-volatility nature, the price fell from $716 by 39% to $438 in mid-December. Get step-by-step guidance on how to invest in Tesla stock and learn the ins and outs of this electric vehicle company.

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“HODL” also acts as an acronym for “Hold on for dear life.” You will often see the term in various cryptocurrency forums and social media circles. Some influencers even encourage their followers to “hodl” various crypto tokens as part of their long-term strategy. FUD has come to stand in for ‘fear, uncertainty and doubt’, which refers to the holy trinity of tactics used by the marketing and advertising industries to influence consumers. More recently, it has been adopted by the crypto community to refer to the necessity of holding firm against the ‘fear, uncertainty and doubt’ prompted by the volatile movements of the markets. When a stock or crypto’s price is at its lowest point, investors typically experience fear, anger and panic that can lead them to sell at the worst possible time.

We believe everyone should be able to make financial decisions with confidence. If you run into people telling you to “hodl,” there’s a good chance that you’ve encountered cryptocurrency enthusiasts. Be sure to use good judgment in making critical financial decisions, such spin up your own blazing fast wordpress server in minutes with spinupwp as purchasing a cryptocurrency. “HODL” is a cryptocurrency-related slang that stands for the word “hold” misspelled.

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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. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Some enthusiasts have even accepted HODL as an acronym, meaning to “hold on for dear life.” The term is also related to “diamond hands,” which means that you have an unbreakable grip on the crypto you own. What started as a typo in an online forum has developed a real meaning of its own.

It functions as a medium of exchange and can also be held as an asset or investment. Decentralization is the major feature and advantage of cryptocurrency, as it is not issued by a central authority such as a country’s central bank. The misspelled term “HODL” circulated quickly in the forum and spread to other cryptocurrencies. Cryptocurrency investors use the term to refer to buy-and-holding assets for a longer time horizon rather than making frequent trades. Many long-term HODLers take the here’s how much bitmex makes in fees from derivatives trading in one single day examples of successful gains as a validation of a strategy that at times can border on zealotry.

1. The “Oracle of Omaha” famously encouraged investors never to own a stock for 10 minutes that they wouldn’t be comfortable holding for 10 years.
2. 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.
3. In that case, buying and holding means you’ll ride it all the way to a complete loss.
4. Many long-term HODLers take the examples of successful gains as a validation of a strategy that at times can border on zealotry.
5. There are thousands of cryptocurrencies on the market today, and the number of long-term winners in that group is much smaller.

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Cryptocurrencies continue to gain more attention as an investment opportunity due to the remarkable breakouts in 2017 and 2020. The trend of financial decentralization and currency digitalization provides room for growth to cryptocurrencies. Under the post-COVID low-interest context with inflation expectation, investors also hold cryptocurrencies for value reserve. Since the original HODL forum was posted in December 2013, bitcoin prices are up about 2500%. Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment.

In online forums devoted to cryptocurrency, users can be shunned for liquidating part of their holdings even after significant long-term gains. An asset-holder who follows the strategy does not sell, even as the market changes. Many people who “HODL” do not even pay close attention to the day-to-day market movement of cryptos, instead preferring to take a long-term view of their tokens. This article is not an endorsement of any particular cryptocurrency, broker or exchange nor does it constitute a recommendation of cryptocurrency or CFDs as an investment class. Trading in contracts for difference (CFDs) is riskier than conventional share trading, not suitable for the majority of investors, and includes the potential for partial or total loss of capital. You should always consider whether you can afford to lose your money before deciding to trade in CFDs or cryptocurrency, and seek advice from an authorised financial advisor.