What does HODL mean in crypto?

Neo from The Matrix asks Morpheus, “What are you trying to tell me, that I can trade my Bitcoin for millions someday?” Morpheus responds, “No Neo, I’m trying to tell you that when you’re ready … you won’t have to.” If you have ever spoken to anyone in crypto, the term HODL will probably sound familiar to you. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

• Crypto forums may preach the benefits of HODLing, but there isn’t definitive proof that it works for crypto investments in the same way it has traditionally worked for the stock market.
• This is not an offer, solicitation of an offer, or advice to buy or sell securities or open a brokerage account in any jurisdiction where Open to the Public Investing is not registered.
• Today, Bitcoin prices are also down 59% in 2022 as rising interest rates have triggered a sell-off in cryptocurrencies and other risk-on assets.
• Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

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. In addition to hacks and glitches, you could lose your crypto if a blockchain’s validator misbehaves (an occurrence known as “slashing”). Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Tokens based on a blockchain, NFTs are used to guarantee ownership of an asset. We’ll take you through three top tips to keeping your crypto secure and impervious to hacking.

HODLing as an investment strategy

Cointree is the best crypto exchange in Australia and is trusted by tens of thousands of investors. All you need to do is create and verify your account, deposit funds, and you’re ready to make your first purchase. Moreover, many investors believe that it’s still early days for crypto and there are still incredible gains to be made.

This is important as it can help spur adoption of crypto as a payment method. Meanwhile, BUIDL encourages people to roll up their sleeves and build decentralised applications, platforms and tools that improve the crypto ecosystem. The term HODL began as an accidental (beverage induced) misspelling of ‘hold’. He is also a staff writer at Benzinga, where he has reported on breaking financial market news and analyst commentary related to popular stocks since 2014. Mr. Duggan is also the author of the book “Beating Wall Street With Common Sense” and has contributed news and analysis to U.S.

What does HODL mean in crypto? HODL Definitions

While staking crypto could increase your gains over time, it’s riskier than holding coins in a hardware wallet. When Bitcoin’s price slumped in late 2013, user “GameKyuubi” wrote a post called “I AM HODLING” on the crypto forum Bitcointalk. In this thread, GameKyuubi advocated for amateur investors to hold their Bitcoin (BTC) positions as the coin’s value declined rather than day trading or panic selling. Each investor should make a decision based on their goals and risk tolerance. If you’re uncertain about your ability to play the market or want a long-term investing strategy, HODLing may be right for you. In fact, the HODL strategy was originally known as the buy-and-hold strategy, and is used in many investment areas, including the stock market.

• However, if an analyst could zoom into the monthly price action of most of these assets it would be evident that most experienced wild rides in short-term durations.
• One in which long-term profits are sought, trying to get the maximum benefit from the cryptocurrencies they have.
• To learn more about digital assets and trading strategies, check out our academy.
• FUD is another acronym that stands for ‘Fear, Uncertainty, and Doubt.’ Part of the reason why cryptocurrency markets are so volatile is that they are vulnerable to public perceptions.
• To do it right, you shouldn’t take profits when your crypto is skyrocketing, and you shouldn’t back out when prices are going down.

As a result, hodlers are theoretically safe from some trading tendencies, be it buying at a high price or selling at a low price (the latter is also known as “SODL” – a less commonly used term derived from “HODL”). HODL is an investing strategy in which individuals purchase cryptocurrencies and hold them for a long period of time. This allows investors to take advantage of an increase in the value of the asset. Someone adopting a HODL strategy isn’t trying to time the market, and they aren’t going to sell their investments when they think the market might dip. Brokerage services for alternative assets available on Public are offered by Dalmore Group, LLC (“Dalmore”), member of FINRA & SIPC. “Alternative assets,” as the term is used at Public, are equity securities that have been issued pursuant to Regulation A of the Securities Act of 1933 (as amended) (“Regulation A”).

FUD

Traders who use the SPEDN strategy believe in spending cryptocurrency in order to encourage real-world adoption. This approach believes that popularizing digital currencies can help raise their value. HODLing requires a long time horizon, so it’s usually best for investors that don’t need access to their cash for a long time. If you’re looking to cash out quickly, HODLing may not be the right approach for you. What he’s suggesting is, that unless you’re a great trader, the HODL investment strategy can be a good option in crypto. Cryptocurrency has been the best performing asset class of the past decade.

• Keeping assets in a “cold” hardware wallet, like a USB drive, prevents hacking and theft— and unlike a centralized exchange, it’s completely offline.
• Without surveillance from a central authority, cryptocurrencies can be used for fraudulent activities, such as illegal transactions and money laundering.
• Brokerage services for alternative assets available on Public are offered by Dalmore Group, LLC (“Dalmore”), member of FINRA & SIPC.
• Digital currency bitcoin has seen a tumultuous ride in recent weeks, as the price fell to trade below $6,000 per coin in June, down from a high of over $19,000 last year.
• In that case, it’s challenging to HODL through market downturns—particularly because cryptocurrencies are among the most volatile and speculative asset classes.

Disclaimer – Information found on our website is not a recommendation or financial advice. Our website and marketing collateral use reference rates as an indicator only and should not be used for decision making. HODL may not be the right approach for every crypto investor and every cryptocurrency.

Understanding the HODL Strategy

Premium users get access to guidance from expert analysts, as well as data from Morningstar’s industry-leading reports. When deciding whether to HODL, consider your own investment strategy and goals, as well as your risk tolerance. Bitcoin investors were taking to forums like Bitcointalk to share their fears and encourage each other to stay the course.

• It’s been an interesting journey, one that’s taught me a lot about the value of patience in investing.
• However, there’s always a chance that prices may continue to rise after you’ve sold and you may end up regretting your decision to not wait longer.
• Oftentimes, other investors will suggest HODLing as a solution to FUD.
• With all the attention, jargon that was once just used for inside jokes in early cryptocurrency chat rooms and on Reddit threads has now become a part of the dialogue.
• Staking on blockchains like Ethereum, Solana, or Polygon earns passive income with minimal effort.

You will need to pay capital gains tax in Australia if you buy cryptocurrency and later sell or exchange it at a higher price — a crypto tax Australia. While Wall Street executives make long-term investments and Wall Street Bets traders have diamond hands. 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. Once-popular altcoins like OneCoin, BitConnect and TerraUSD are just three examples of cryptos that failed, generating a near-complete loss for any investors who employed the HODL strategy. The HODL community encourages other investors not to cash out of their crypto when prices rise and not to throw in the towel when crypto prices fall.

HODLing: A Buy-and-Hold Strategy

If you have a positive outlook on blockchain technology and aren’t afraid of market volatility, HODLing crypto may be worth considering. However, those more interested in taking an active approach to portfolio management should focus on daily trading over HODL. Hodling sounds a lot like the long-term buy-and-hold strategy The Motley Fool employs in the stock market. Generally speaking, we recommend owning stocks for at least five years. The wealth-building benefits of compound returns make a bigger difference in a longer time frame. The same philosophy should work for high-quality cryptocurrencies as well.

Understanding HODL: An Overview of the Top Crypto Trading Strategy

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. HODL was later retrofitted to be an acronym (backronym) for “Hold On for Dear Life” and refers to not selling, even during strong market volatility and poor market performance.

Crypto Tax Australia 2023: Capital Gains on Trades – Cointree

U.S. Treasuries (“T-Bill”) investing services on the Public Platform are offered by Jiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC. When you enable T-Bill investing on the Public platform, Hexn you open a separate brokerage account with JSI (the “Treasury Account”). SPEDN encourages people to use cryptocurrencies in the real world to buy goods and services, or simply to pay their bills with crypto.

Is HODLing a Good Investment Strategy?

Our partners cannot pay us to guarantee favorable reviews of their products or services. However, since they have outsized positions, they need to sell while everyone is buying, so they keep shilling the asset as they offload their positions and once they stop pushing it. Typically, the price of the asset comes crashing down as the latter buyers look to exit their positions. To shill is another common term within the social media circles of crypto enthusiasts which means to selfishly promote a coin or token.

After all, there’s a lot of crossover between these investment strategies. Investors who are concerned about losing a hardware wallet or can’t afford a high-quality cold wallet can choose to keep their assets on a centralized exchange, if they are comfortable with counterparty risk. As with any investment strategy, there are benefits and drawbacks to the HODL technique. “FUD,” “to the moon,” “DYOR”—there are so many industry-specific colloquialisms that newbies to the market could benefit from a crypto-specific dictionary.

What is Coinbase and how does it work?

This form of ledger technology is what’s behind cryptocurrencies and other tech trends. Avoiding the urge to give in to fear, uncertainty, and doubt (FUD) is one of the hardest barriers to overcome. HODLing forces you to think about the long-term benefits of your strategy.

Reference to any specific strategy, technique, product, service, or entity does not constitute an endorsement or recommendation by dYdX Trading Inc., or any affiliate, agent, or representative thereof (“dYdX”). DYdX makes no representation, assurance or guarantee as to the accuracy, completeness, timeliness, suitability, or validity of any information in this Article or any third-party website that may be linked to it. You are solely responsible for conducting independent research, performing due diligence, and/or seeking advice from a professional advisor prior to taking any financial, tax, legal, or investment action. Just as with stocks, bonds, mutual funds, and ETFs, investing in crypto is risky. The price of digital assets fluctuates significantly, so it’s important to pay attention to the market and do your research before investing.

Editorial integrity

The original crypto plunged to $4,000 before ending the year around $29,000. Indeed, the original HODLer in 2013 had no illusions about their ability to play the market. But the post conveyed a confidence that time would improve Bitcoin’s fortunes. We believe everyone should be able to make financial decisions with confidence. HODL ($HODL) is a cryptocurrency that was named based on the popularity of “HODL” as an expression in the crypto community.

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. “HODL” is a term that is often used in the Bitcoin investment community. It is a misspelling of “hold,” with an interesting story behind it. It is not only a popular term but is also considered an investment strategy.