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. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. More than a decade after its genesis, HODL remains a popular meme across crypto circles and social media. What began as a typo has metamorphosed into a crypto industry calling card, and there are even products and services incorporating the phrase into their name.
HODL originated from a rant by a member named GameKyuubi on the popular forum Bitcointalk. This happened when, in 2013, Bitcoin prices fell 39%, down from $716 to $438 in 24 hours. The price drop came after a long bull run 6 augmented reality examples to inspire your luxury brand in the market when many investors assumed they would continue to make gains. 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.
The Philosophy Behind the HODL Strategy
Over time, “HODL” evolved into an acronym for “Hold On for Dear Life,” reinforcing the idea of sticking with one’s investments through turbulent times. Instead, investors purchase the cryptocurrency and hold it for an extended period. Although the term HODL is closely linked to cryptocurrency, the concept behind it is not unique to this space. Many stock investors follow a similar buy-and-hold approach, especially when dealing with index funds or long-term investments in sectors like technology.
The word “HODL” first appeared on Dec. 18, 2013, in a post on the BitcoinTalk forum by a user named GameKyuubi. Individual Retirement AccountsSelf-directed individual retirement accounts are offered by Public Investing, a registered broker-dealer and member of FINRA & SIPC. Information about retirement accounts on Public is for educational purposes only and is not tax or investment advice. Visit the IRS website for more information on the limitations and tax benefits of Traditional and Roth IRAs.
He also was a freelance writer for Ars Technica, TIME, USA Today, CNN, WIRED, and AOL’s Daily Finance. He holds a bachelor’s degree in English and a master’s degree in library and information sciences from Florida State University. What started as a typo in an online forum has developed a real meaning of its own. Stellar XLM and XRP by Ripple use distributed ledger mechanisms for fast and cheap payments. Suppose you’re looking for an open-source network that serves unbanked individuals and small businesses. However, if you’re looking for a network that serves banks and other financial institutions, then XPR by ripple is a better choice.
Best Wallets for Long-Term Holding (Cold vs Hot Storage)
Plans are self-directed purchases of individually-selected assets, which may include stocks, ETFs and cryptocurrency. Plans are not recommendations of a Plan overall or its individual holdings or default allocations. Plans are created using defined, objective criteria based on generally accepted investment theory; they are not based on your needs or risk profile. You are responsible for establishing and maintaining allocations among assets within your Plan. Plans involve continuous investments, regardless of market conditions. See our Investment Plans Terms and Conditions and Sponsored Content and Conflicts of Interest Disclosure.
- If the platform fails to gain traction or the utility is not in demand, the token’s value can plummet.
- Projects without strong fundamentals, developer support, or a real-world use case may eventually fail—resulting in a total loss for HODLers.
- An investor does not need to monitor market fluctuations on a daily basis, analyze charts or develop complex trading strategies.
- At its core, HODL promotes patience and conviction over impulsive trading.
Eventually, the meme caught on and others followed his example to HODL their coins and never sell in order to outlast market volatility. When the meaning “hold on for dear life” was attached to the term is unclear. During a crash, your portfolio can lose a lot of value, sometimes for extended periods. There’s also a risk that some assets may never recover if their fundamentals deteriorate. Emotional stress and opportunity cost are real concerns for HODLers in bear markets. Yes, HODLing is generally safer for beginners because it avoids the complexities and risks of frequent trading.
Key Considerations for HODLing Safely
It’s worth noting that ‘market timing’ — the act of trying to predict future price movements — is notoriously difficult and risky, even for seasoned investors. Satoshi Nakamoto, the creator of Bitcoin, designed it as a medium of exchange and a store of value, suggesting a long-term use case. Therefore, many investors view any time as a good time to HODL as long as it aligns with their personal investment strategies and risk tolerance. HODLing is often seen as a simple and effective strategy, especially for those who prefer to avoid the stress of daily trading. It’s based on the belief that over time, the value of cryptocurrencies will increase despite short-term price swings, a view held by many crypto traders.
- Unlike the zero-sum nature of trading, where every profit requires another’s loss, the HODL investment strategy embodies a belief in the inherent growth of the crypto market over time.
- The value of T-bills fluctuate and investors may receive more or less than their original investments if sold prior to maturity.
- Psychologically, HODLers often experience less stress since they are less focused on daily price movements.
- And while it might not be the most exciting strategy, over time it often delivers better results than trying to outsmart every market move.
Does HODLing Guarantee Profit?
Apex Clearing Corporation, our clearing firm, has additional insurance coverage in excess of the regular SIPC limits. For those seeking guidance on shaping their overall investment strategy, tools like Public can provide valuable insights. With access to expert analyst guidance and Morningstar’s industry-leading data, Premium users can make informed decisions tailored to their financial objectives. If you’re exploring alternative strategies like SPEDN or BUIDL, it’s important to consider how they align with your financial goals.
Jiko how to buy a monkey nft AccountsJiko Securities, Inc. (“JSI”), a registered broker-dealer and member of FINRA & SIPC, provides accounts (“Jiko Accounts”) offering 6-month US Treasury Bills (“T-bills”). For the avoidance of doubt, a Jiko Account is different and separate from the Treasury Account offered by Public Investing and advised by Public Advisors (see “Treasury Accounts” section above). He didn’t bother fixing the typos, and within hours of declaring “I AM HODLING”, the term “HODL” caught on like wildfire.
Watching the value of your investments fluctuate can be emotionally challenging, especially during prolonged market downturns. Frequent trading can lead to high transaction fees and tax implications. HODLing avoids these costs, allowing you to keep more of your gains.
Understanding the philosophy of HODLing
The term HODL originates from an infamous typo in 2013, when a Bitcoin enthusiast start brokerage with white label software posted a message on a forum with the phrase “I AM HODLING” in response to market fluctuations. The poster intended to write “holding,” but the typo stuck, and the crypto community embraced it as a rallying cry for those who refuse to sell their assets, regardless of market volatility. HODL is most suitable for investors who believe in the fundamental value of their chosen projects and expect growth over years, not weeks.
