HODL stands for “Hold On for Dear Life,” and it’s a word used by cryptocurrency investors. HODL is based on the standard buy-and-hold investing strategy, despite the fact that it appears to be a hilarious misspelling of the word “hold.”
HODL is one of several insider terminologies used in forums and publications by beginners to cryptocurrency investment. It is known as crypto slang: words like FUD, Moon, Sats, and HODL, which started as chatroom jargon, are now popular cryptocurrency buzzwords that crypto investors should be familiar with. However, when the term gains popularity in other market areas, you’ll also hear the term used by other investors.
What is HODL?
HODL is a word that has become popular as cryptocurrency has gained popularity.
While it appears to be an acronym – one of those words that abbreviate a word into its initials, such as FBI or KFC, HODL is just a misspelling of the word HOLD that has gained popularity due to the absurdity of its misspelling.
The word HODL was created as an accidental typo in a 2013 message board post on the Bitcointalk forum. Some traders have reused the term to imply “hold on [for] dear life” since then. This rhetoric is known as a backronym, which involves adding words to an existing acronym to give it a new or similar meaning that wasn’t intended when the phrase was created.
Origin of HODL
The actual origin of HODL is well established. The context around it provides a valuable lesson for cryptocurrency traders and others interested in getting started with cryptocurrency trading.
The phrase “I AM HODLING” was uttered by Bitcointalk member GameKyuubi on December 18, 2013, as part of a rant against the difficulty of trading cryptocurrencies. The price changes in digital currency are notoriously volatile, and those who try to predict them can find themselves purchasing high and selling low, slowly losing their capital.
The word quickly became a meme on social media, and the misspelling can still be found on internet message boards like Reddit’s infamous Wall Street Bets board.
HODLing Strategy
HODLing is a more extreme strategy than simply holding, thus the term Hold On for Dear Life. This indicates that you should hold crypto – or stock – even if the market is incredibly volatile.
This method can be a smart way for investors who might normally try to time the market. When the market is crashing, it can be used to help investors resist the urge to panic and sell. This is especially important for new investors prone to emotional or hurried decisions. Traders that want to profit from market volatility, such as day traders or Forex traders, might also be similar to investors who do not use the HODL strategy. Rather than investing long-term, these investors aim to purchase low and sell high, or short sell, to profit on small market fluctuations.
Although anything is possible, a downturn in the markets as a whole is unlikely to result in a crypto market crash, which is why a HODL approach might make sense. It’s crucial to remember that even the worst downturns, such as the stock market crash that triggered the Great Recession, resulted in a notable comeback.
HODL and Cryptocurrencies
When it comes to cryptocurrency, HODL might refer to one of two things. Investors could be discussing a specific HODL strategy they employ to choose whether to buy or sell crypto. They might also be referring to the HODL token.
The HODL strategy is founded on the premise that crypto investors shouldn’t trade based exclusively on short-term price movements. Instead, cryptocurrency investors should hang on to their coins or tokens, riding out the ups and downs of market volatility. Even if cryptocurrency prices fall, they have the ability to rise again, making up for losses over time.
This is what happened when the crypto market crashed in June 2021. After the cryptocurrency’s price dipped, many Bitcoin investors saw all of their 2021 profits vanish. Other cryptocurrencies, like Ethereum and Dogecoin, have also seen significant losses. However, the bear market was temporary, as many crypto prices have returned to pre-crash levels.
Crypto investors who cashed out during the crash might have lost a lot of money. Those who choose to HODL, on the other hand, might well be rewarded with significantly larger price changes when the cryptocurrency market recovers.
Takeaways
- HODL is an acronym for “Hold On for Dear Life.”
- The word HODL was created accidentally in a 2013 message board post on the Bitcointalk forum.
- HODL means that you should hold crypto even if the market is incredibly volatile.
- It can be used to assist investors in resisting the impulse to panic-sell when the market is crashing.
