Hold on for dear life!

When entering the world of cryptocurrency, it would come as no surprise that there is a wealth of information to learn. One of the more confusing aspects upon entry is understanding and decoding the terminologies and jargon used by traders. The term HODL is frequently used across news and social platforms like Telegram groups, and Reddit threads. No, cryptocurrency traders are not all bad spellers, they really do mean HODL, not HOLD.

HODL Meaning and Origins

HODL is a humorous backronym meaning “Hold On for Dear Life” that dates back to 2013. The term HODL first came on to the scene in a Bitcoin talk forum when a frustrated trader under the username GameKyuubi was letting his bottle of whiskey do the talking and posted the now infamous thread “I AM HODLING”.

The point of GameKyuubi’s post was to let the cryptocurrency world know that, despite the serious fall Bitcoin had just taken, they planned to still hold on to their BTC. What GameKyuubi didn’t know was this simple typo would soon become an iconic term used by crypto communities around the world. HODL started gaining traction in mainstream media and late-night television, in addition to being held responsible for the creation of countless memes.

Why Would You HODL onto Your Cryptocurrency?

The highly volatile nature of cryptocurrencies can be a good thing, if used to an advantage. That being said, more often than not, short-term swings work against new traders. Some traders, known as “hodlers”, live by the philosophy of hodling and shun trading based on short-term price movements. This strategy aligns with the original discourse by GameKyuubi in the belief that novice traders are likely to make mistakes in their timing and lose money or at best make less than they would have by simply hodling onto their crypto investment.

Short-term trades are often conducted by investors with a pessimistic outlook in what they consider a “bear market”. These investors address themselves or a particular cryptocurrency as “bearish”, indicating their preference to sell rather than HODL. Two tendencies short-term traders can exhibit are FUD (Fear, Uncertainty, and Doubt), which leads to selling low, and FOMO (Fear Of Missing Out), which leads to buying high. By simply hodling rather than selling, hodlers can relieve themselves of these pressures and other profit-eroding emotions.

Is HODLing a Good Investment Strategy?

When analyzing the short-term swings we’ve seen, cryptocurrencies may seem like a risky investment. However, by taking a step back like hodlers have, you can see the long-term growth of Bitcoin and other coins occur in spurts rather than a steady stream.

At the head of hodling is patience, backed by a theory from noted analyst Thomas Lee, head of research at Fundstrat Global Advisors, who advises hodling Bitcoin. Hodlers, and Thomas Lee, keep an optimistic or “bullish” opinion that bitcoin’s price follows a predictable pattern. Based on previous trends, Bitcoin is a “bull market” that it will rise again, even after losing almost 50% of its value amidst the COVID-19 pandemic.

Beyond your typical hodlers, there lies a group of die-hard believers in the theory and cryptocurrency itself, known as maximalists. These hardcore crypto investors believe that cryptocurrencies will eventually replace fiat currencies (government issued currencies) and become the new basis of all future economic structures. Therefore, to maximalists, the current fiat exchange rate of cryptocurrencies is irrelevant, and the only option is to HODL.

Which Cryptocurrencies Can You HODL?

Of course, you can HODL any cryptocurrency you like. However, it is difficult to know which coins will prevail and survive long-term. While there is a colorful spectrum of coins and tokens on the rise that are worth looking at, there are two that we believe stand out among the crypto crowd.

Bitcoin remains the king of the cryptocurrency world in terms of users, market cap, and value despite numerous contenders in the market. It’s the first cryptocurrency to dent the mainstream and easily the most famous cryptocurrency in the world. Over the years, other cryptocurrencies have surpassed Bitcoin in terms of speed of transaction. Still, no coin comes close to its market cap, number of users, and overall popularity. Moreover, Bitcoin usage with merchants is up 600% from 2018 to 2019, further ingraining Bitcoin in the financial world, according to new reports.

Ethereum has the second largest market capitalization after Bitcoin. It is, without a doubt, one of the biggest success stories out of the cryptocurrency world. With the new upcoming launch of Ethereum 2.0, it could push the platform to new heights. Ethereum isn’t just another cryptocurrency, it gives users the ability to program application, called dApps, on its blockchain infrastructure. ETH remains one of the most popular altcoins in the world and a darling amongst developers and investors alike.

What’s Next to Come for Hodlers and Cryptocurrency?

Bitcoin and other cryptocurrencies have experienced both exponential increases and decreases in price over the years. Hodlers are of the opinion that Bitcoin will rise again even after its slide in price, and some even believe now could be the best time to buy BTC. There are arguments on both sides for continued longevity or the ultimate demise of the crypto market. What side are you on?

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