HODL: Is it short term volatility or long term risk?


Now what is HODL? “HODL” is crypto slang jargon which actually means “to hold”. When a person holds crypto assets for a long time, even when the market trends are not favorable, it is called HODL. This term suggests that users should not rush out and sell cryptocurrency when the price drops or rises sharply. HODL is commonly used in crypto forums and social media platforms. Holding assets in times of instability is considered a prudent investment strategy.

What is the HODLing strategy?

When it comes to coins like Bitcoin or Ethereum, most people are short to medium term traders. They buy the tokens from Bitcoin Pro when the price drops and resell it at a profit after a few hours, days or, in the case of the real patient, weeks. There won’t be a massive price increase in a matter of days or weeks, but you still have a chance to make a bottom line.

HODLing, on the other hand, refers to the buy and hold strategy, where you buy the crypto and hold it until the next giant spike, preferably after you store it in a secure cold wallet. Investors who follow the HODL strategy are generally not looking to make a quick buck and instead want to profit from the long-term appreciation in the asset’s value.

Advantages and disadvantages of the HODLing strategy

Some experienced bitcoin traders may argue that the HODLing method does not maximize profits as much as other techniques. It may seem true to many people that various trading methods, if not properly applied, can do more harm than good.

As stated earlier, HODLing may be the ideal entry approach for newbie investors. Compared to day trading, which is incredibly difficult and time consuming, HODLing can be considerably easier. Unlike some of the other tactics, it doesn’t have a steep learning curve and doesn’t need a full-time commitment.

On the other hand, there is the problem of HOLDers failing to capitalize on the volatility of bitcoin. Other trading tactics, if executed correctly, have the potential to generate higher gains as they are less dependent on waiting for the price of bitcoin to rise. Instead, they depend on the sharp eyes and abilities of traders to spot the chances of profit in the market.

what does hodl mean and is it a good strategy?  - cryptimi

Another problem with HODLing is that since investors keep their coins “for life”, they are not used for their intended purpose – as a form of payment. Since bitcoin is not used for this reason, the development of the coin and the number of companies accepting bitcoin are further hampered. In addition, the HODLing coin increases the barriers to widespread acceptance, as bitcoin is seen as an investment tool rather than a real instrument with real opportunities to benefit the economy.

Is the HODLing investment strategy viable?

While we won’t say whether you need to hold your currencies for long periods of time, we can’t deny that HODLing has a crucial advantage – in most cases, it provides security that is much appreciated by investors.

This in no way indicates a concern for personal safety, but rather allows you to avoid short-term market volatility. If there aren’t any major earthquakes or unless Coinbase goes down, you can be sure your BTC will be worth more a few years later than tomorrow.

file: bitcoind hodl.svg - wikimedia commons

Final words

In the end, holding onto your crypto might seem like the best idea, but the point is, like any other investment strategy, it has its drawbacks. Most blatantly, of course, is that this is a long-term strategy and will earn you absolutely nothing to lose in the short term. If you want to hold your crypto for years to come, you need to have a primary source of income to support yourself. Finally, HODLing should only be your choice based on the circumstances and doing your proper research.


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