Now, what is HODL? “HODL” is a crypto slang lingo that actually means “hold.” When someone holds crypto assets for a long period even when market trends are not in favor, it is called HODL. This term suggests users must not rush and sell cryptocurrency when the price drops or rises abruptly. HODL is commonly used in crypto forums and social media platforms. Holding assets in unstable times is considered a prudent investment strategy.
What is the HODLing Strategy?
When it comes to coins like Bitcoin or Ethereum, most people are short-term or mid-term traders. They buy the tokens from Bitcoin Pro when the price sees a fall and sell it at a profit after a couple of hours, days, or in the case of the real patient, weeks. There won’t be a massive rise in price in just a few days or weeks, but you still stand a chance of making a neat profit.
HODLing, on the other hand, refers to the buy-and-hold strategy, where you buy the crypto and hold on to it until the next giant spike, preferably after storing it on a secure cold wallet. Investors following the HODL strategy generally don’t look to make a quick buck and instead want to profit from the asset’s long-term value appreciation.
Pros And Cons of The HODLing Strategy
Some experienced bitcoin traders may argue that the HODLing method does not optimize profit as much as other techniques. This may seem to be true for many individuals, diverse trading methods, if not properly applied, might do more damage than good.
As previously said, HODLing may be the ideal entrance approach for beginning investors. In comparison to day trading, which is incredibly hard and time-consuming, HODLing may be significantly easier. Unlike some of the other tactics, it does not have a high learning curve and does not need a full-time commitment.
On the other side, there is the problem of HOLDers failing to capitalize on bitcoin’s volatility. Other trading tactics, if executed properly, have the potential to generate higher gains since they depend less on waiting for bitcoin’s price to rise. Instead, they depend on traders’ acute eyes and abilities to spot profit chances in the market.
Another problem of HODLing is that since investors are holding on to their coins “for dear life,” they are not being utilized for their intended purpose—as a form of payment. Because bitcoin isn’t being utilized for that reason, the coin’s development and the number of bitcoin-accepting businesses is hampered even further. Furthermore, coin HODLing increases hurdles to widespread acceptance since bitcoin is seen as an investment tool rather than a genuine instrument with real possibilities to benefit the economy.
Is the HODLing Investment Strategy Viable?
While we won’t say whether you should hold your currencies for extended periods, we can’t deny that HODLing does have one crucial benefit: in most cases, it provides much-appreciated safety to investors.
That doesn’t anyhow indicate the concern of personal safety, but rather that it lets you avoid short-term volatility in the market. If there aren’t any major earthquakes or unless Coinbase goes down, you can be pretty sure your BTC will be worth more a couple of years later than it would be tomorrow.
At the end of the day, holding on to your crypto might seem like the flat-out best idea, but the fact is that like every other investment strategy, it comes with its drawbacks. The most glaring, of course, is that it’s a long-term strategy and will get you absolutely nothing to lose in the short term. If you want to hold your crypto for years, you’ve got to have a primary source of income for sustenance. Finally, HODLing should only be your choice, based on circumstances and doing proper research.