HODL: Overview, History, and Benefits

HODLING has become one of the most widely used terms in the cryptocurrency world, even more so than Bitcoin itself. But what is the HODL meaning? This guide will answer all your questions on the HODL phenomenon, including its history and benefits.

What is “HODL”?

HODL is an acronym derived from hold on for dear life and refers to buying cryptocurrency and not selling it, even when the price drops or goes down. Even if you don’t think of yourself as someone who HODLs, you probably should. Here’s everything you need to know about HODLing cryptocurrencies.

HODL Strategy

If you can’t bear to watch your cryptocurrency holdings climb—or plummet—in value, you might want to try a strategy called HODL. This acronym stands for hold on for dear life, and it refers to holding onto your coins even if their value seems too high or too low. 

You buy and hold because you believe in blockchain technology and cryptocurrencies in general, not necessarily because you expect immediate gains.

Best HODLing Coins

A cryptocurrency to be a good long-term investment needs more than just a solid development team. You should look for three things when determining if a coin is worth holding onto for years to come: adoption, technology, and decentralization. According to the crypto experts at SoFi Invest, some of the best coins to HODL include:

  • Bitcoin (BTC)
  • Cardano (ADA)
  • Ethereum (ETH)
  • Ripple (XRP)
  • Binance Coin (BNB)
  • Tether (USDT)
  • Dogecoin (DOGE)
  • Uniswap (UNI)
  • Polkadot (DOT)

One of my favorite cryptocurrency tricks is sticking with coins that have been stable for a long time. A coin that has been around for a couple of years, and only recently lost value, will usually bounce back over time as crypto markets become more stable. We usually refer to these coins as blue-chip cryptos—the ones you want in your portfolio if you plan on holding on for a few years.

Knowing When to HODL

It’s one thing to HODL (hold) through volatile times, but it’s another thing altogether knowing when it’s time to HODL. If you’re still at an early stage in your cryptocurrency journey, consider using dollar-cost averaging, which means purchasing your coins over some time (e.g., every two weeks) with consistent amounts of fiat money.

Benefits of HODL

With almost every coin experiencing wild price fluctuations, it’s hard not to panic sell. But if you can fight your fear of missing out (FOMO), you might benefit from HODLing. Here are some of the main advantages.

  1. HODL gives you a better chance of making a profit when the price rises
  2. It reduces the amount of stress in your life — you don’t have to worry about trying to time the market!
  3. HODL helps you ride out the dips and volatility of the market
  4. If you HODL your cryptocurrency in a private wallet rather than on an exchange, there is less risk of losing your coins due to hacks or accidental loss of private keys

Long-term holding of cryptocurrencies has proven profitable in many cases, including Bitcoin. For example, at its lowest point in 2013, 1 BTC cost $13.30; by 2016, that same amount was worth $434.46; and today, its value is about $41,729.40.

Risks of “HODLING” Cryptocurrencies

Although cryptocurrencies may be an excellent investment vehicle, there are some risks associated with HODLING cryptocurrencies. For example, if you HODL a cryptocurrency, and it suddenly becomes worthless because of a security vulnerability or technical flaw, you will not be able to recover your investment. Additionally, while cryptocurrencies can generate high returns relatively quickly, there is no guarantee that they will retain their value over long periods.

Hopefully, this guide explains how HODLing works so you can start trading without any doubt. Remember to always do your own homework, take precautions when trading cryptocurrencies, and never invest more than you can afford to lose.

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