What Does HODL Mean?
HODL stands for Hold On for Dear Life.
HODL is what you do when one of three things occurs:
- You bought crypto and expect it to go up over time, despite short-term fluctuations
- You bought at the top and believe it can go higher
- Or it cratered and you refuse to book the losses
HODLers purchase an asset for a number of reasons but chief among them is the belief that no matter what happens, the asset they funded will return significantly.
What Is HODLING?
HODLing is the Art of the HODL.
It’s simple in theory—buy and hold. It’s nothing new, as “buying and holding” has been the core tenet of the IRA crowd for decades.
It tends to run lockstep with other, similar gems like “time in the market beats timing the market,” and “buy when there’s blood in the streets.”
The emotional element is what sets HODL apart from other strategies. High-frequency traders have it easy—they can dump whenever they want. HODLers have to roll over and check their phone every day and see what the blockchain hath wrought.
Sometimes a HODL position can last a week. Sometimes decades. Mentally, a HODL can be a lot to deal with when the position trends downward.
Is HODL The Best Strategy For Crypto?
HODL is actually a perfectly legit crypto strategy. Swing traders might argue this, but over time returns can be pretty healthy.
You can HODL one of two ways:
- Invest 100% at once
- Dollar-cost average (DCA)
Dollar-cost averaging means that you’re making incremental investments each day, week, month, or year. You’re increasing your total holdings while hopefully lowering your average price. DCA also removes the emotional aspect of timing a trade.
Some of those emotional aspects have acronyms too. There’s Fear of Missing Out (FOMO) and Fear, Uncertainty, and Doubt (FUD). Learn these.
Whether or not to HODL depends on your own risk and investment goals. Generally speaking, HODLing, a strong asset, will almost always perform better than frequent trading.
When To HODL?
Here’s a great example of a HODL.
Morgan bought some BTC at an all-time high. It then loses 99% of its value. Almost every investor would freak out and sell. Morgan held. Morgan HODLed. Morgan has diamond hands.
Morgan bought BTC in 2011. Morgan bought BTC at $32. Good job, Morgan, because Morgan cashed out in 2020 When BTC hit 69k (nice).
Returns? 215,625%
Investors and traders HODL, when they believe in something so deeply the cost of remaining illiquid, outweighs the cost of missing out on atmospheric rises in asset pricing.
The HODL Origin Story
A spicy crypto trader misspelled “I am Holding” in a thread, and the rest is history. Prophetic lurkers called it early—the thread would be legendary.
They were, of course, right, as a (not super sober) trader/investor not only penned but spawned an entirely new trading ethos. GameKyuubi, you are immortal.
What Is the HODL Coin?
The HODL coin is a yield-farming token that generates liquidity. It was built on the decentralized Binance Smart Chain and is designed to reward investors who HODL their coins.
The price is, well, low, but that isn’t the purpose of the HODL coin anyway.
The coin has a market cap of around $1.3m. Rewards are distributed every three days.
HODL is run by CEO Adam Rovers and Jeff Gilden, two marketing gurus who have pumped their own cash into the project. It’s a cool concept, but their goal was $1b in market cap, so they have a long ways to go.
To Sum It Up
Not all investments go to the moon. At least not right away.
HODL exists for this very reason. Market fluctuations mean nothing to a HODLer, who refuses to sell for reasons—both legitimate and…less legitimate—that back up their hypothesis that the value of the asset will appreciate over time.
HODLers have diamond hands.
Frequently Asked Questions
HODL stands for “Hold on for Dear Life.” It was initially just a misspelling of “hold,” but since then has caught on, traders and investors using the acronym to describe when they refuse to sell. This can be for any number of reasons, including long-term growth potential, disregard for volatility, or because you’re holding the bag and don’t want to finalize your losses.
HODL means the same in crypto as it does in more traditional asset classes—hold on, don’t sell.
HODL can be a perfectly viable long-term strategy. It removes the day-to-day aspect of investing and allows the investor to go about their life, looking for new opportunities. Historically, HODLers either make out kings, or they hold a bag forever. Choose your investments wisely if you play to HODL.
Forbes have stated that HODLing is the best strategy, and the evidence does point that way. In markets of sporting volatility, which crypto certainly is, HODLing can be an excellent way to temper emotions when it’s perfectly normal to see double-digit swings daily.
Much as HODLing is a verb used to describe what people are doing when they HODL, a HODLer is someone who is, in fact, holding on. HODL is the idea, HODLing is the action, and HODLer is the person HODLing..
