Before taking action based on any such information, we encourage you to consult with the appropriate professionals. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. Some crypto traders choose to use other approaches, like SPEDN or BUIDL. While the misspelled terms are send-offs of HODL, these strategies are completely different in their approach.

  • By holding stocks for the long term, investors can weather short-term market instability.
  • Come back in five years, and you’ll find that some of today’s hottest cryptos never quite made it to the moon, and that diamond-hand hodlers lost a lot of money.
  • While it’s still unclear if HODLing will pay off for crypto investments, it’s historically been a go to approach for stock traders who want to invest in a bear market.
  • The HODL community encourages other investors not to cash out of their crypto when prices rise and not to throw in the towel when crypto prices fall.
  • Please see Open to the Public Investing’s Fee Schedule to learn more.

The misspelling set off a frenzy in the online world of crypto investors and the term quickly became a meme. Crypto traders began to encourage each other to HODL, or hold, their investments even when the market was volatile. The term “HODL” first appeared in an online cryptocurrency forum in 2013 as a misspelling of the word “hold” — a typo that readers quickly embraced.

Pros and Cons of HODL

There are HODL memes, HODL forums, and even HODL T-shirts, but the term is more than a punchline. In fact, it’s synonymous with a popular—and powerful—passive investment approach. Oftentimes, other investors will suggest HODLing as a solution to FUD. If you’re looking for ways to shape your investing strategy, Public Premium features can help.

The HODL strategy has since its origin been used as a community anthem used whenever the price of a digital asset has been rallying. The idea is to discourage selling at the top, which could possibly trigger a reversal of the asset’s price. Some say you should HODL until your coin is worth a sum that you’re happy with and then sell and take the profits. However, there’s always a chance that prices may continue to rise after you’ve sold and you may end up regretting your decision to not wait longer.

The Development of Crypto Regulation: Brief Introduction

The answer to the birth of this concept is the extreme volatility that exists in the cryptocurrency market. The crypto market is known for being very volatile, which can be a big problem and cause huge losses to cryptoasset investors. Many of these investors would take advantage of these sharp rises and falls in the market to make numerous trades in short periods and make quick profits.However, there are others who bet on another type of strategy.

  • In such a situation, any more selling could lead to further price correction and the best action for the long-term investors is to discourage weak hands from letting go and thereby mitigating further losses.
  • Saving is all well and good, but can you imagine being able to save and at the same time earn a profit for it?
  • HODLing is a sound investment strategy that has been successfully applied even within the traditional markets; however, its efficacy depends on the investor’s goals.
  • In reality, you’re better off selling some cryptos before they burn too much of your money.

But these phrases have extended beyond crypto to other assets, such as stocks. During the run-up in the stocks of GameStop and AMC in 2021, individual traders rallied around the phrases, egging each other on to continue to hold or even buy more on the dips. The exact origin of HODL is well established, and the context surrounding it offers a good lesson to cryptocurrency traders and those who would like to get started trading crypto. Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first.

Can you HODL in the stock market?

Due to their highly volatile nature, cryptocurrencies provide great opportunities for traders to build up long and short positions frequently. However, “hodling” can provide more safety to investors, as investors are not exposed to short-term volatility and can avoid the risk of buying high but selling low. This typo quickly caught on within the forum and then spread across the wider crypto community. Since then, it has been adopted by crypto traders and investors as an acronym for ‘Hold On for Dear Life,’ representing a steadfast approach to holding cryptocurrencies amidst market fluctuations. If you’re curious about making HODL a part of your portfolio, we can help you get started. DYdX’s exchange offers dozens of advanced trading features for crypto traders, including fee-free perpetuals.

  • The term HODL has also inspired the creation of a similar term often, BUIDL, which is commonly used by the cryptocurrency community to refer to the many kinds of applications that are being built within the blockchain industry.
  • We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money.
  • Just like HODL, BTD or BTFD is a term used to encourage more investment whenever an asset’s price corrects during a rally, i.e., it dips.
  • Rather than trying to time the market, this strategy simply operates under the assumption that the asset’s price will increase over time.
  • But the post conveyed a confidence that time would improve Bitcoin’s fortunes.
  • The acronym is a misspelling of the word « holding » by a user on an online forum.

Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The fall was possibly a result of a ban of third-party payment companies from working with Bitcoin exchanges from China’s central bank (People’s Bank of China). The author loaded the post with typos and upper cases to express his firmness in his simple holding strategy. This Article does not offer the purchase or sale of any financial instruments or related services.

Editorial integrity

While it looks like an acronym – one of those terms like FBI or KFC that abbreviates a word into its initials – HODL is simply a misspelling of the word hold, albeit one that caught on for the silliness of its mistake. Bankrate follows a strict
editorial policy, so you can trust that our content is honest and accurate. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. At Bankrate we strive to help you make smarter financial decisions.

  • An investor identifies a project with great potential and invests in it for the medium to long term.
  • It can be difficult for even professional traders to time short-term trades.
  • JSI and Jiko Bank are not affiliated with Public Holdings, Inc. (“Public”) or any of its subsidiaries.
  • Some crypto traders choose to use other approaches, like SPEDN or BUIDL.
  • It’s important to consider cryptocurrency volatility in your investment decisions.
  • However, crypto markets are highly unstable and there is no guarantee that HODLing will be successful.

While it’s still unclear if HODLing will pay off for crypto investments, it’s historically been a go to approach for stock traders who want to invest in a bear market. The goal of HODLing is to wait out recessions and other dips in the market, with the goal of cashing out when the market improves. Many long-term HODLers take the examples of successful gains as a validation of a strategy that at times can border on zealotry. In online forums devoted to cryptocurrency, users can be shunned for liquidating part of their holdings even after significant long-term gains. HODL is a term derived from a misspelling of « hold, » in the context of buying and holding Bitcoin and other cryptocurrencies.

What is a “HODLing” investment strategy?

The ethos and mantra, however, could be applied to any digital currency or even traditional stocks and shares. It’s just more commonly said when it comes to cryptocurrencies, less so tokens. If someone on Wall Street told a client to HODL, they might get looked at weirdly, for example.

“HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo.

Luckily, many believe that Bitcoin is still in its infancy and you may still be early if you start investing now. In that case, buying and holding means you’ll ride it all the way to a complete loss. Regardless of what you buy, you’ll need to analyze whether it makes sense to use a buy-and-hold strategy.

Trading vs. HODL: Who Makes The Biggest Profit?

You can also participate in staking rewards with many cryptos, allowing you to generate income while you continue to hold the digital asset and potentially ride it to new heights. However, it’s worth noting that being named ‘HODL’ doesn’t necessarily make it a valuable or safe investment. Like with any other cryptocurrency, the decision to buy and hold HODL tokens should come after careful research. Yes, there is a cryptocurrency called HODL (Hodl Hodl) with an eponymous ticker (HODL). At its core lies the idea of rewarding holders for not selling their tokens, thus providing an incentive for the ‘HODL’ strategy. It’s a fun nod to the term and its origins in the crypto ecosystem.

The History of HODL

Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Cryptocurrencies continue to gain more attention as an investment opportunity due to the remarkable breakouts in 2017 and 2020. The trend of financial decentralization and currency digitalization provides room for growth to cryptocurrencies.

Risks of “HODLING” Cryptocurrencies

In a perfect world, you’ll never invest in any of these cash-burning crypto projects. In reality, you’re better off selling some cryptos before they burn too much of your money. Many newer investors will start out HODLing by using a dollar cost-average strategy. This means that you buy a set amount every day, week, or month, which allows you to buy in at the average price throughout your investment period.

The term is, however, used to describe huge losses, and even though ‘huge’ is considered a relative term, losing a lot of coins qualifies as being rekt. Now that you understand what it means to HODL, let’s dive into some of the other popular crypto-related terms that are worth knowing in order to participate in conversations amongst fellow blockchain enthusiasts. « Pump and dumpers are people who often say, ‘Hey, let’s all of us together pump this coin,’ which means buy the coin, create the demand in the market, the coin will go up in value, » Saddington says. FUD means « fear, uncertainty and doubt. » Bitcoin followers advise to HODL your coins despite the FUD of those outside the community. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey.

What does HODL mean in crypto? HODL Definitions

If you simply bought bitcoin ten years ago and held it until today, you would have made incredible returns. So the reason people HODL crypto is simple; it seems to pay to be a hodler. Back in 2013, someone with the username hexn.io GameKyuubi made a post on the BitcoinTalk forum. After a few whiskeys, they misspelled “I AM HOLDING” and wrote “I AM HODLING” instead. Other users found his spelling mistake hilarious and they became ‘hodlers’ too.

“HODL,” one of the most frequently used terms in the cryptocurrency world, originated years ago from a typo. The term « HODL » is crypto-industry slang for the practice of holding tokens for the long term. In other words, market timing is difficult and risky, and making the wrong moves will lock in paper losses that may otherwise disappear over time.

They’re holding for the long-term and looking to build life-changing wealth. You only sell in a bear market if you are a good day trader or an illusioned noob. In a zero-sum game such as this, traders can only take your money if you sell. Bitcoin has only been around since 2009, giving it a limited long-term track record compared with stocks, bonds, real estate and other assets. Others have argued that the stubbornness and close-mindedness of HODL culture is “cult-like,” blinding the community to any legitimate criticisms of Bitcoin as an investment or a currency. There’s no question the HODL strategy has paid off well for GameKyuubi and other Bitcoin investors that have held onto their crypto investments.