HODL Overview, History, Benefits and Risks of HODLING
But “HODL”, as it has gained popularity among crypto enthusiasts, has come to mean “hold on for dear life”. Crypto HODLers, like buy-and-hold stock investors, pride themselves on “holding on” by not selling their cryptocurrency, no matter what happens in the crypto markets. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
Other Crypto Slang Terms
- In no time, the term HODL spread like wildfire throughout the crypto world.
- But bitcoin’s gains don’t come without years of “HODLing” through stomach-turning losses.
- In a perfect world, you’ll never invest in any of these cash-burning crypto projects.
- For those who invest in cryptocurrency, HODL has become a banner proclaiming their long-term allegiance to digital currency.
- The meme also acknowledges novice crypto investors that they are not skilled enough to profit from short-term trades amid the notoriously volatile crypto market.
Despite high market volatility, many cryptocurrency owners believe in the long-term financial prospects of Bitcoin and other tokens. At the same time, many other people believe that buying cryptocurrency is equivalent to gambling. The biggest reason why “hodl” has become such a popular term is the general volatility of the prices of cryptocurrencies. Many cryptocurrency tokens, even relatively stable ones such as Bitcoin and Ethereum, frequently have very volatile market swings. The cost of these tokens can fall 100% one month and then rise 300% within the next few months.
What Does HODL Mean in Crypto?
The legendary volatility of cryptocurrency is due to the fact that it’s driven entirely by sentiment, since no hard assets or cash flow back cryptocurrencies (with the exception of stablecoins). Many crypto coins, maybe even most of the 20,000 or so in existence, may end up worthless. On Dec. 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. Digital currency is notoriously volatile, and those who distributed ledger technology examples try to time the price swings may find themselves buying high and selling low — gradually or quickly eating away at their capital.
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). If even one whale decides to sell a particular token, they could tank the price entirely. There’s no stephen james bmw now accepts bitcoin as payment question the HODL strategy has paid off well for GameKyuubi and other bitcoin investors that have held onto their crypto investments. 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. But these phrases have extended beyond crypto to other assets, such as stocks. During the run-up in the stocks of GameStop and AMC in 2021, individual traders rallied around the phrases, egging each other on to continue to hold or even buy more on the dips.
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It often refers to retaining crypto assets that you own for an extended period, even throughout a highly volatile market movement. “Hodl” is meant to encourage people to not impulsively sell when a cryptocurrency drops dramatically or rises to become highly profitable to sell. Bitcoin has only been around since 2009, giving it a limited long-term track record compared with stocks, bonds, property 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. Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade.
Without surveillance from a central authority, cryptocurrencies can be used for fraudulent activities, such as illegal transactions and money laundering. It is not only a popular term but is also considered an investment strategy. The idea of hodling crypto is to buy a cryptocurrency and hold it for a very long time. 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. I’LL lastminute com cloud devops engineer full remote working smartrecruiters TELL YOU WHY,” their message read (this time spelling “hold” correctly).
“The people who are in the space very much have a belief about the transformative nature of the technology itself,” Duong says. But bitcoin’s gains don’t come without years of “HODLing” through stomach-turning losses.