You are going through social media when you come across someone who is “HODLING” or telling someone else to “HODL.” Confused? Here’s what the term means in the bitcoin and financial worlds—and why it’s not misspelt. let’s get started without any further delay! you reading this article only on Cryptocurrencysimple.com.
HOLDING = HODLING
“HODL” is a cryptocurrency-related slang term that stands for the misspelt word “hold.” It frequently refers to holding crypto assets for a lengthy period of time, even during a very tumultuous market movement. The term “Hodl” is intended to urge users not to sell hastily when a cryptocurrency drops suddenly or climbs to become highly profitable to sell.
“HODL” is also an abbreviation for “Hold on for dear life.” The word is frequently used in bitcoin forums and social media circles. Some influencers even push their followers to “hodl” various crypto assets as part of their long-term plan.
What Causes People to “Hodl?”
One of the main reasons individuals see “hodl” as a realistic technique is their faith in the underlying technology and the application case.
For example, Bitcoin and most other cryptocurrencies are built on a technology known as the blockchain, which has a variety of applications, including the ability to make secure and anonymous payments via the internet.
As a result, some individuals think that Bitcoin will be the future of all financial transactions rather than fiat currencies such as dollars and euros.
“Hodling” is an appealing idea for many bitcoin owners. A single Bitcoin’s value had risen from less than a dollar when it initially appeared more than a decade ago to five-digit numbers in recent years.
Despite severe market volatility, many cryptocurrency owners trust in Bitcoin and other tokens’ long-term financial possibilities. However, at the same time, many others consider that purchasing bitcoin is akin to gambling.
Many individuals also feel that when people buy rather than sell their tokens, the value of cryptocurrencies rises. That’s why “hodl” is such a famous phrase in the community—frequently, it’s used to reassure newcomers who are concerned about investing in such a volatile product. In addition, “HODL” combats “FUD,” which stands for “fear, uncertainty, and d
Doubt” among cryptocurrency users. FUD may involve everything from skeptics to governments to unfavourable news coverage of the bitcoin problem.
What Is the Process of HODL?
HODL is an investing method in which people buy cryptocurrencies and keep them for an extended time. This permits investors to profit from a rise in the asset’s value. Someone who follows a HODL approach isn’t attempting to time the market, and they aren’t going to sell their investments if they believe the market is about to fall.
The Benefits and Drawbacks of HODL
- It is not dependent on market timing
- Long-term capital gains taxes apply on profits.
- a track record of success
- Cryptocurrency does not have a track record.
- Capital is locked up for extended periods.
Advantages of “HODL”
1) It is not dependent on market timing: Short-term trading is based on market timing, which implies predicting when prices will increase and decrease. But, unless you’re a market expert—which most people aren’t—doubtful it’s that you’ll be able to foresee every market change precisely. HODL eliminates the danger of market timing.
2) Long-term capital gains taxes apply to profits: Capital gains on assets kept for longer than a year are deducted in taxes at a lower rate than capital gains on assets held for less than a year. 4 Your profits will be taxed at a reduced rate if you use a HODL plan.
3) Proven buy-and-hold track record: The fact that buy-and-hold investing has an established track record is why so many financial professionals encourage it. While investors must understand the distinction between stock investment and cryptocurrency trading, buy-and-hold investing has generally won out.
Explained Cons of “HODL”
1) Capital gets locked up for extended periods: When your money is locked up in the market for many years, if not decades, it cannot be spent elsewhere. Therefore, HODLing may not be an appropriate technique for any money you want to utilize in the following years, so be sure you have cash set aside for investing.
2) Cryptocurrency has no proven track record: There are many decades of success to look back on with buy-and-hold investment, and you may observe market trends move upward over the long run. In reality, the first stock exchanges were established in 1792, providing us with literally centuries of data to analyze. 5 However, because Bitcoin is just approximately a decade old, there is no proof that it will continue to rise in value indefinitely. As a result, we don’t know if a buy-and-hold approach will work in the case of Bitcoin.
Slangs Most Commonly Used in the Crypto World
Altcoin: An altcoin is any cryptocurrency that is not Bitcoin. It’s a combination of the phrases “alternative” and “coin.”
ATH: ATH stands for ‘all-time high,’ and it signals when a coin has attained its highest price ever.
ATL: is an abbreviation for ‘all-time low.’ Similar to ATH, except it refers to a coin’s lowest ever price.
Bear Market: A bear market occurs when the leading cryptocurrencies have dropped by at least 20%.
Blockchain: A blockchain is a mechanism for recording information that cannot be changed or hacked. The data is kept in ‘blocks’ that are linked to one another.
Bull Market: A bull market is one in which cryptocurrency values are increasing and consumers are purchasing.
Crypto: An abbreviation for cryptocurrency.
DCA: Dollar-cost averaging is a method for investing that involves splitting the entire amount you wish to invest and investing it in instalments rather than all at once.
An exchange is a platform where you may buy, sell, trade, and send cryptocurrency.
Fiat money: is money whose value is related to the value of a government-issued currency. For example, the Australian dollar is a fiat currency.
FUD: In the crypto realm, FUD stands for “fear, uncertainty, and doubt,” It is a method used to undermine the legitimacy of cryptocurrencies.
HODL: The term “HODL” was coined on a Reddit thread. A user encouraged others to keep their money and not sell them; however, he misspelt ‘hold’ and typed ‘hodl.’ The internet, of course, adored it.
Initial coin offering (ICO): A corporation seeks to gather funds to establish a new coin. People receive coins in exchange for investing money.
Mining: Bitcoin and other cryptocurrencies are generated by using high-powered computers to solve complicated cryptographic equations. When you solve the problem, you’ll be awarded a coin. This is known as mining.
Moon: Moon or mooning (no, not that type of mooning) is used when individuals believe the price of a cryptocurrency will shortly rise. The closer it goes to the moon, the higher it climbs (metaphorically, of course).
Pump and dump: This is when the fake buzz about a cryptocurrency is produced, causing the price to skyrocket.
Shilling occurs when someone with a big following or influence, such as Elon Musk, endorses a coin. For example, musk does a lot of stuff with Dogecoin.
Staking: Staking is the process of locking up your funds to collect incentives.
Wallet: A cryptocurrency wallet is a usual app that allows cryptocurrency users to save all their currencies in any location to prevent any hack events. Some folks will even have a hardware wallet (think USB stick).
Whale: A crypto whale is a person or company with a high number of coins of a specific cryptocurrency. We’re not talking about someone with $1,000 worth of Bitcoin. We’re talking about individuals and businesses who hold at least $100 million in Bitcoin and other cryptocurrencies.
Summary
- HODL is an abbreviation for “hold” and refers to a cryptocurrency investing technique in which investors acquire and retain assets for extended periods.
- Short-term trading, in which investors attempt to time the bitcoin market, is the polar opposite of a HODL strategy.
- HODL is comparable to the buy-and-hold strategy used by many stock market investors.
- Buy-and-hold investment has a known track record and is frequently more successful than short-term trading, but it has a higher risk in the case of cryptocurrencies, which lack a documented long-term track record.
Frequently Asked Questions
- Is HODL crypto a good investment?
There are fantastic possibilities for traders to build up both long and short positions often in cryptocurrency markets because of their volatile nature. Investors can benefit from “hodling” since they are not subject to short-term volatility and can avoid the danger of buying high and selling low.
That seems reasonable, but the fact is that both of these tactics can be risky if not done properly.
2. What does crypto HODL mean?
HODL stands for “hang on for dear life,” and it’s a word used by cryptocurrency investors. Despite the fact that it appears to be a hilarious misspelling of the word “hold,”
3. Why is HODL and not hold?
You already know its answer by seeing Question 2.
4. How long should you hold crypto?
HODL is a form of crypto investment is when you expect the price of the cryptocurrency to rise over time — generally an investment that must be held for at least 6 months to a year. Long-term crypto investors want to keep their assets for several years in certain situations.
5. What is the best crypto to hold long-term?
Bitcoin (BTC) Bitcoin is the granddaddy of cryptocurrencies — the world’s first digital currency and still the leader by market cap. So and so forth, Holding the top 10 Cryptocurrencies by the Market cap is the best way you can classify tokens whether they can perform in long term or not ( by long term I mean, Minimum 2-4 years ). Well, you can see the Top 10 Cryptos by Market cap.
