What Does HODL Mean in Cryptocurrency Investment?

Anyone seeking to invest in cryptocurrency will have a wealth of information to learn. While there is a lot of jargon and terminology that needs decoding, you will learn about them as you go about the process of researching and investing in these digital coins. One such term that you will come across often is HODL.

So, what is HODL, what are the pros and cons of using this strategy, and which cryptocurrencies are good candidates for its application? Find out here.

What is HODL?

HODL stands for ‘Hold On for Dear Life’ and is based on the misspelling of ‘hold’ and is specifically related to the process of buying and holding cryptocurrencies. It finds its origin in a 2013 post on the forum, Bitcointalk.

Pros of HODLing

HODLing may prove to be the ideal entry strategy if you are a new investor. Many experienced Bitcoin traders don’t see much value in terms of profits in using this strategy. While this may be true for many investors, most strategies require correct implementation to be effective.

HODLing is considered a much simpler strategy compared to most other strategies. For example, day trading can be quite complicated for new investors. It is not time-consuming and doesn’t have a steep learning curve as many other crypto trading strategies.

Cons of HODLing

When it comes to making the most of Bitcoin’s volatility, the HODL strategy may not be the best option. There are other trading strategies, which when properly implemented, can increase your chances of generating bigger profits. These other strategies, instead of relying on the hope that Bitcoin will gain value, rely on the traders’ eye and ability to see profit-making market opportunities.

Another con to using the HODL strategy is its inherent nature. Since you will be holding onto the coins, you will not be able to use them for their original intended purpose – making payments. As Bitcoin and other altcoins are not used for this purpose, the coin’s development and that of the stores that accept them gets slowed down.

HODLing also develops barriers that block the mainstream adoption of cryptocurrencies. This is because it causes Bitcoin and Altcoins to be seen as investment instruments and not tools that create opportunities to support the economy.

How Does HODL Make Sense – A Scenario

The term ‘HODL’ was created in 2013 by a Bitcoin investor who was affected by the dip in the price of the original cryptocurrency but decided to hold on. Although it was a spelling mistake on his part when he wrote ‘HODLing’, which became a widely popular term within the crypto community.

At the time the term was created, Bitcoin’s price fell 24.7%, with an overall staggering drop of 46% from December to January. It is this form of price movement that causes panic among crypto investors. HODL is an excellent trading strategy for anyone who believes in the disruptive power of cryptos. It banks on the widespread acceptance of cryptos over the long term. There is still a majority of the investor population (even non-investors are now interested in the cryptocurrency universe) that has to add cryptos to their portfolio.

All this means that the value of cryptos is set to increase over the coming years. There are many cryptocurrency investors and traders who do not get moved by massive dips in the market and still win later on. These are investors that HODLed onto their investment. They are now reaping unexpected and almost never-seen-before profits that this market has to offer. To hodl your crypto you need to create binance smart chain wallet address or wallet on any other chain, and deposit your crypto. To keep them secure, it is better to use non-custodial wallets, such as SimpleHold.

Cryptocurrencies to HODL

While you are at freedom to HODL any digital coin, it is important to know the coins that will yield returns in the long term. There are thousands of coins and tokens that may be worth your attention, but there are two that simply stand out.

Bitcoin

Bitcoin is the hottest cryptocurrency in terms of factors such as market cap, active users, and value. Many newer cryptos have surpassed it in terms of transaction speeds, but none has been able to touch its popularity or market cap. Its usage with merchants has also seen unparalleled growth over the years. If you are interested in bitcoin trading, visit https://bitcoin-code.live/.

Ethereum

Ethereum is the second-largest cryptocurrency in terms of market cap and value. It is a major success story and is expected to achieve new highs once Ethereum 2.0 is launched. There is more to its blockchain than what other cryptos have to offer. It has a powerful utility profile where applications known as DApps can be developed on the blockchain infrastructure. Ethereum was worth $1.25 in 2015 and now trades at around $4,000.

Both these coins are expected to stay relevant and gain value in the long term. This makes them more suited for the HODL strategy. It is a simpler strategy, has mostly proven to be safer, and given the long-term growth demonstrated by major cryptocurrencies, a reasonable strategy to generate returns from this market.