The word “hold” has been used in finance for a very long time as part of the buy-and-hold strategy. This investing method involves buying a financial asset and holding it for an indefinite period of time. This is related to the view that an investor should not be swayed by short-term market movements and look to the long-term view. Today, Bitcoin prices are also down 59% in 2022 as rising interest rates have triggered a sell-off in cryptocurrencies and other risk-on assets. But investors who were spooked into selling their BTC in past downturns have lived to regret those decisions. Other forum participants embraced the misspelling, and it soon became the subject of memes.
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The HODL approach has been rewarding for long-term investors in Bitcoin, Ethereum (ETH) and other leading cryptocurrencies, as it’s helped them navigate extreme fluctuations in the crypto market. Buy-and-hold investing occurs when individuals purchase an asset—often stock—and hold it for a period of many years. Rather than trying to time the market, this strategy simply operates under the assumption that the asset’s price will increase over time. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. Hodling sounds a lot like the long-term buy-and-hold strategy The Motley Fool employs in the stock market. The wealth-building benefits of compound returns make a bigger difference in a longer time frame.
- Ben Gagnon, chief mining officer for Canadian-based Bitfarms (BITF), says HODL is more of a mentality than an investing strategy.
- If you want to use the term “hodl,” reserve it for conversations about these tokens or you could be misinterpreted.
- One of the biggest reasons why people view “hodl” as a viable strategy is their belief in the underlying technology and the use case behind it.
- The legendary volatility of cryptocurrency is due to the fact that it’s driven entirely by sentiment, since no hard assets or cash flow back cryptocurrencies (with the exception of stablecoins).
- Investors may have to experience extreme ups and downs of their asset values, which means they should have much larger risk appetites than investors of conventional investment instruments.
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To the extent any recommendations or statements of opinion or fact made in a story may constitute financial advice, they constitute general information and not personal financial advice in any form. As such, any recommendations or statements do not take into account the financial circumstances, investment objectives, tax implications, or any specific requirements of readers. When covering investment and personal finance stories, we aim to inform our readers rather than recommend specific financial product or asset classes. Jason Porter, senior investment manager at Scottish Heritage SG, says the HODL strategy can be particularly useful for crypto investors during market weakness, such as 2022’s crypto winter.
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For those who invest in cryptocurrency, HODL has become a banner proclaiming their long-term allegiance to digital currency. These terms stand in contrast to “paper hands,” those who are willing to sell when volatility ratchets higher. The value of a single Bitcoin has gone from under a dollar when it first came out more than a decade ago to five-digit figures in recent years.
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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. HODL, or “Hold On for Dear Life,” is now a widely known concept in the crypto community that refers to the strategy of not selling your digital assets, even amid extreme price changes in the market. And given Bitcoin’s latest bout of volatility, HODL remains relevant a decade later in 2023. Nest Services Limited, trading as Binance, is the entity ultimately responsible for the Binance Services offered through the Platform.Trading cryptocurrencies involves significant risk and can result in the loss of your capital. You should not invest more than you can afford to lose and you should ensure that you fully understand the risks involved.
The original crypto plunged to $4,000 before ending the year around $29,000. Upgrading to a paid membership gives amirshnll custom-device-emulation-chrome you access to our extensive collection of plug-and-play Templates designed to power your performance—as well as CFI’s full course catalog and accredited Certification Programs. Access and download collection of free Templates to help power your productivity and performance.
Hodling crypto only works with long-lived digital currencies that can build value over time. When you hodl one of the short-lived cryptos, that promised trip “to the moon” turns into a deep-sea dive with no return ticket instead. In a perfect world, you’ll never invest beginner’s guide to buying and selling cryptocurrency in any of these cash-burning crypto projects.