HODLing will be a strange word to read and your mind will likely jump to “HOLDing”. If this sounds familiar, you’re not far off the mark. HODL is just a “hold” misspelled, and it was born out of the crypto community.
The HODL Narrative
The word “HODL” came from the Bitcoin Form, which is a platform designed for investors to share opinions and insights about the crypto economy and Bitcoin. Back in 2013, a user named “GameKyuubi” put out a post declaring “I AM HODLING” – misspelling “HOLDING”.
In 2013, Bitcoin’s worth grew from around $15 to more than $1,100, which meant early investors saw an enormous return of 7230%. It took less than half a month to fall by around 50% because crypto is so volatile. This drop was likely caused by a ban on third-party payment platforms working with exchanges from the People’s Bank of China. The post mentioned above is a direct response to the 2013 drop in value.
Before long, the misspelt forum post spread through forums like wildfire, and it wasn’t long before investors everywhere were adopting the phrase HODL to describe holding crypto. When the poster decided to HODL, he made the right decision because 2017 saw Bitcoin reach around $19k – a record that was only beaten by the 2021 surge to $65,000.
Reasons to HODL Crypto
Cryptocurrencies, which are built using blockchain technology, are still in their teething stages and have only recently gained mainstream attention. This means that there are still plenty of projects being launched, and they’ll have huge benefits for society.
By backing projects and crypto coins, you’re supporting Web3 (the next era of the internet). Although the landscape is volatile, the only way to benefit from investment is to ride out the low points and trust that the community will bring in a value spike. If investors release funds in a panic during a market crash, they may lose considerable assets, and they’ll be kicking themselves when the value surges again.
HODLing crypto is simple enough, you simply need to open a digital wallet and choose a reputable exchange. As well as HODLing until the market raises, some platforms allow you to earn crypto on assets stored for more than a year, which is a win-win and can help mitigate losses.
Risk of HODLing Crypto
There’s no denying the benefit of HODLing, but there are risks involved like anything else to do with cryptocurrency. For example, there are lots of unknowns in the crypto world and regulations can enter the landscape at any time, which could impact any HODL strategies. Additionally, you need a strong risk tolerance level to ride the volatile crypto rollercoaster. Finally, there are zero guarantees the coin will increase in value.
Take Away
Cryptocurrency will always carry risk, so have a management strategy in place before investing. HODLing makes for a great way to manage market crashes and can be a saving grace. However, you need to avoid panic selling, which will leave your pockets at a significant loss.
