HODL: What Does It Mean and Where Does It Come From?

HODLing stocks can help investors avoid the instinct to pull out when the market is in decline. By holding stocks for the long term, investors can weather short-term market instability. The HODL strategy is about holding assets over the long term, which means that cryptocurrency investors don’t have to be concerned about timing the market.

Even Bitcoin, now a relatively stable cryptocurrency, still registers 10-20% moves in some days. To understand and be part of conversations within crypto enthusiast circles, you need to know the community’s lingo. In this guide, we will explain what is ‘HODL,’ which is one of the most prominent terms used by cryptocurrency investors. Also, you’ll get to discover ten other common phrases to use in blockchain forums and chat groups.

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Instead of buying low to sell high, i.e., timing the market, he would start HODLing onto his currency and not selling. “In a zero-sum game such as this, traders can only take your money if you sell,” he wrote. And if you’re a HODLer, capital gains aren’t the only way you can make money on cryptocurrency.

Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. The HODL strategy, also known as buy-and-hold, involves buying an asset and holding onto it, even if the market becomes unstable. HODLing is based on the idea that, historically speaking, the market will ultimately trend upward.

HODL Culture

Public’s Recurring Investing feature can help you use this strategy by automating your crypto investments. Trading digital currency is risky and the price canfluctuate significantly. On the other hand, the buy-and-hold strategy is widely considered to be a sound investing approach.

• It is not only a popular term but is also considered an investment strategy.
• It’s a tricky game and quite challenging for traders to time their transactions exactly right so as to maximize their profits each time.
• 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.
• Regardless of what you buy, you’ll need to analyze whether it makes sense to use a buy-and-hold strategy.
• Many newer investors will start out HODLing by using a dollar cost-average strategy.

HODLing is a cryptocurrency investment strategy not unique to crypto but rather a rehashed term made to appeal to the eccentric crypto community. The term HODL emerged from a 2013 message board post on the Bitcointalk forum as an errant misspelling. With a relatively short history compared to other types of assets and fiat currencies, cryptocurrencies face a future with lots of unknowns. Without surveillance from a central authority, cryptocurrencies can be used for fraudulent activities, such as illegal transactions and money laundering. Hodling crypto only works with long-lived digital currencies that can build value over time. When you hodl one of the short-lived cryptos, that promised trip “to the moon” turns into a deep-sea dive with no return ticket instead.

How hodl works

It’s a tricky game and quite challenging for traders to time their transactions exactly right so as to maximize their profits each time. However, as a HODLer, all you need to do is hold on and ignore all market fluctuations. The content of this article (the “Article”) is provided for general informational purposes only.

• Each investor should make a decision based on their goals and risk tolerance.
• While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service.
• Although hardware wallets are less convenient to use, HODLers are hanging on to their assets for years, so they only have to worry about keeping the device safe until it’s time to sell.
• The term whale means a very large marine mammal that lives in the ocean.

It’s important to conduct thorough research and consider seeking financial advice before making any investment decision. Despite the uncertainty, HODLing can be a powerful investment technique for those with an optimistic view of the future of crypto. It takes the guesswork out of timing the crypto markets—so while HODLers may not buy at the absolute “best prices” for their coins, they have the advantage of a long-term time horizon. If the strategy works out in their favor, their assets should be worth more in a few years, regardless of the initial price they paid. Plus, HODLers can add to their positions during bear markets (when prices are falling) because they believe in the future success of the assets. The crypto slang term was originally a misspelling of the word “hold” in a 2013 forum post, but it evolved into an acronym for the phrase “Hold on for dear life,” referring to a buy-and-hold crypto investment strategy.

What if you don’t want to HODL? Then it’s time to SPEDN or BUIDL

With buy-and-hold investing, you generally choose stocks based on a company’s long-term success and prospects. 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. HODLers typically focus on the long-term prospects of digital assets and don’t chase immediate profit. Come back in five years, Hexn and you’ll find that some of today’s hottest cryptos never quite made it to the moon, and that diamond-hand hodlers lost a lot of money. There are thousands of cryptocurrencies on the market today, and the number of long-term winners in that group is much smaller. Some cryptocurrencies are jokes, others are money-making frauds, and another group has all the right intentions but flawed technical designs.

• Public’s Recurring Investing feature can help you use this strategy by automating your crypto investments.
• A self-custodial wallet is strictly managed by the wallet holder, meaning there’s no centralized intermediary between the trader and their crypto.
• When you hodl one of the short-lived cryptos, that promised trip “to the moon” turns into a deep-sea dive with no return ticket instead.

One in which long-term profits are sought, trying to get the maximum benefit from the cryptocurrencies they have. Moreover, in a normal crypto trading environment, people make money by buying and selling coins as their prices fluctuate. However, it’s actually this trading activity that causes  cryptocurrency markets to fluctuate, this is because they’re largely based on the forces of supply and demand. Increased demand pushes prices upwards while significant selling pressure drives prices lower.

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Similarly, you can hold a cryptocurrency for an indefinite length of time, through multiple price changes, because you believe that the coin will do well in the future. 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.

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Then, that person is left with “a coin they don’t want at a price they can’t sell it [at].” To make sense of such crypto-slang, CNBC Make It asked Peter Saddington, a serial entrepreneur and early bitcoin investor who runs a bitcoin community called The Bitcoin Pub, to break it down. Saddington first purchased bitcoin in November 2011 when one coin only cost $2.52.

HODL: A typo that became a crypto investing strategy

Other forum participants embraced the misspelling, and it soon became the subject of memes. The week the post was published, the price of Bitcoin dipped nearly 40%, as a result of actions taken by the Chinese central bank. On December 18, 2013, Bitcointalk user GameKyuubi uttered the phrase “I AM HODLING” as part of a rant against the difficulty and even futility of trading cryptocurrency.

What Is the Difference Between HODL and a Buy-and-Hold Strategy?

Most importantly, you can store your coins in your free multi-coin wallet that you receive when you sign up. Inspired by the misspelling of HODL, crypto communities also encourage each other to SPEDN (spend) or BUIDL (build). Much like the HODL meme, they’re intended to help grow the crypto space. While the term initially was a direct reference to ‘hold’, in true crypto style, the term was ‘hard forked’ and now carries several meanings. “I believe this is crucial for new investors because they are more likely to act emotionally or impulsively,” Porter says. But Bitcoin’s gains don’t come without years of “HODLing” through stomach-turning losses.

Tips for Becoming a Successful HODLer

These schemes are often orchestrated through apps like Slack or Telegram, he adds, and advises curious chatroom readers to beware of such gimmicks. An investigation into “pump and dump” schemes by Business Insider found the practice to be an “open secret among many cryptocurrency traders.” “A whale is someone who owns a lot of cryptocurrency,” Saddington says.

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The History of HODL

Buy-and-hold investors tend to hold their assets for an extended period of time to profit from the long-term value appreciation. In contrast, traders are much more active in transactions and seek returns by buying at low prices and selling at high prices. This strategy relies on the theory that, although there may be short-term volatility in the market, stocks will provide a good return over the long term. However, as with crypto investments, it’s recommended to have a diversified portfolio and make well-informed decisions based on research or financial advice. However, whether it’s a good strategy or not depends largely on the individual’s risk tolerance, investment goals, and the specific cryptocurrencies they are investing in. Like all investment strategies, HODLing has its risks, including the potential for significant losses due to the market volatility of cryptocurrencies.

What does ‘HODL’ mean in crypto?

Learn where the term came from and why it’s a useful approach for amateur traders. It’s essentially the opposite strategy from day traders trying to maximize their cryptocurrency profits on a short-term basis. JSI uses funds from your Treasury Account to purchase T-bills in increments of $100 “par value” (the T-bill’s value at maturity). The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity. T-bills are subject to price change and availability – yield is subject to change.

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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. It functions as a medium of exchange and can also be held as an asset or investment. Examples of cryptocurrencies include Bitcoin, Ethereum, Ripple, etc.