HODL is a term that comes from an incorrect spelling that translates to “hold,” in these circumstances of purchasing and holding Bitcoin and other crypto currencies. It also means “hold on to your life” in the crypto world.
“HODL,” commonly referred to, was first coined in 2013. HODL (or hodl) began in 2013 when an article on the Bitcoin discussion forum. The value of Bitcoin in 2013 was volatile and jumped to more than $950 in the middle of December after having around $150 in the April month of year before. 1
2 The reports on the 16th of December. 16th of 2013 of an Chinese prohibition on payment firms who work in conjunction with Bitcoin exchanges might be the source of inspiration for the original Bitcoin discussion thread.
What is what is HODLING?
at 10:03 a.m. UTC, on December. 18 Bitcoin chat forum member GameCube posted “I am HODLING”–a drunken, semi-coherent lengthy rant full of typos about the user’s lack of trading skills and the determination to hold his Bitcoin from then on. “I typed that phrase twice, knowing I was incorrect when I first typed it. But it’s not right. W/E,” GameKyuubi wrote about the famous spelling error”holding “holding.” “WHY do I hold? I’ll explain why,” he continued. “It’s because I’m not a good trader and I’m sure I’m A FAILURE trader. You good traders will detect the highs and the lows. They can spot the pit pat piffy wings wong wang exactly as that, and earn an extra million dollars. No issue bro.”
GameKyuubi found that the most effective strategy was to keep the money in the event of a downturn: “You only sell in a bear-market if you’re a skilled day trader or a lulled beginner. People in between hold. In a zero-sum games such as this, the traders can only accept your money if you can sell.” He later confessed to having one of the whiskeys and thought over the spelling whisk(e)y.
The origins of HODL:
HODL was initially an error in spelling made by a user whose name was Game Kyuubi Game Kyuubi’ Bitcoin Talk. In the initial BitcoinTalk thread, which was titled “I I AM HODLING” Game aKyuubi wrote:
I have typed d in that text twice since I was sure I was incorrect when I ordered it. It’s still wrong. w/e. The GF is out at a lesbian bar. BTC crashed. Why am I LOCKED? I’ll tell you why. It’s because I’m a terrible trader and I’m sure I’m A WRONG trader.
HODL has evolved into an option for those who claim they do not possess the knowledge to perform short-term trading – like scalping, day trading, and swing trades. The term HODL has also prompted the development of a similar phrase, BUIDL which is frequently utilized in the crypto community to mean the variety of applications being developed within Blockchain technology.
What is the reason “HODL” Cryptocurrencies
Cryptocurrency is a kind of digital currency that is backed through blockchain technologies. It is a means of exchange but can be used as an investment or asset. Some examples of cryptocurrencies include Bitcoin, Ethereum, Ripple and many more. Decentralization is the main characteristic and benefit of cryptocurrency since it’s non-issued by a centralized authority , such as the central bank.
The cryptocurrency market continues to attract more recognition as an investment opportunity due to the impressive rises that occurred in 2017 and 2020. The growing trend of financial decentralization and currency digitalization will bring expansion of cryptocurrencies. In the post-COVID low-interest environment with inflation expectations, investors also have cryptocurrencies to reserve value.
“Hodling” is a reference to the buy-and-hold strategy. Buy-and-hold investors typically hold their investments for an extended period to reap from value appreciation over the long term. Contrarily traders are more involved in transactions and look for returns by buying at bargain prices and then selling at high prices.
Because of their precarious nature, cryptocurrencies offer excellent opportunities for traders to create short and long positions regularly. Yet, “hodling” can provide greater security to investors since investors aren’t exposed to volatility in the short term and stay clear of the danger of buying high, but then selling at a low price.
The risks from “HODLING” Cryptocurrencies
Despite the recent record-breaking rate of return and advantages of investing according to the above paragraph, prudent investors should consider the potential risks of having cryptocurrencies. The price of cryptocurrency is highly unpredictable. Investors might endure extreme fluctuations of their value of assets and, therefore, need to have a higher risk tolerance than those who invest in conventional investment instruments. They need to have the capital reserves to avoid selling their assets or meeting the unexpected liquidity needs.
With a brief history compared to other kinds of assets or fiat currencies, cryptocurrencies are facing an uncertain future, with many unanswered questions. The policies regarding cryptocurrency have not been established. Without oversight from an authority central to the matter, cryptocurrency are a potential source of fraud operations, including fraud or money laundering.
Different countries and different parties have differing opinions about the use of cryptocurrency. They can be detrimental to their ability to support international transactions, which can impact the value of cryptocurrency. A negative public perception and policymaking can affect the asset’s value over the long run.
What’s the distinction between HODL as well as buy-and-hold strategy?
There is nothing different between HODLing an cryptocurrency and buying and holding strategies. You can hold a stock by its volatility, because you are confident that the company’s future is secure. You can also keep the crypto for an unlimited period, with numerous price adjustments, since you are convinced that the cryptocurrency will perform well shortly.
HODL is an acronym for “Hold on for the Rest of Your Life.” It is employed in crypto to describe a method of holding on to bitcoin assets by adjusting its price and volatility. The term is a misspelling from the word “Hold” by an individual on a Reddit forum. Most commonly employed by Bitcoin maximalists who are a part of the Bitcoin maximalists, the HODLing method is similar to the standard buy-and-hold investment strategy. HODL could also be a reference to the HODL token on the blockchain-based cryptocurrency exchange Binance’s Smart chain. Customers can earn rewards with Binance’s coin by putting their tokens into a liquidity pool.