What is HODL and Its Purpose in Cryptocurrency Investment

Nafa Lightyani

What is Cryptocurrency HODL

Rancakmedia.com – In this article we will discuss about what is HODL In crypto investment, for those of you who are curious about the meaning, history, advantages and disadvantages, and why many investors HODL, see below.

The term HODL is indeed a promising method for certain types of investors, therefore HODL is not just a term, but an investment strategy that is worth considering.

What is HODL

In the world of digital money, the term “HODL” refers to an investment method that involves purchasing an asset and holding it for a long period of time.

Short-term volatility in cryptocurrency markets often necessitates the use of HODL strategies to protect investors from further losses. The goal of this strategy is to make money in the long term.

The term HODL actually comes from the word "hold" or "hold", then it is believed that it stands for hold on for dear life.

This is of course in accordance with the concepts included in the HODL strategy, so what is Hold? Hold or HODL is a term used in the bitcoin world to denote an asset that you are not allowed to sell any current assets.

Maintaining assets in the bitcoin world is not as easy as it seems. For example, you acquire bitcoin assets. It is possible to withstand losses or hold on to shares if the price falls. As a result, HODL becomes a viable option in this strategy.

Generally, to maintain the assets owned, a cut loss will be carried out. This is done so that losses do not increase with the expectation that prices will continue to fall. However, the opposite is true with the HODL strategy.

People who practice the HODL strategy think that in the future the price of their assets will rise again. In order to use the HODL strategy, one must have confidence in future price increases once the asset price reaches the purchase price.

Origins of the Use of the Term HODL

When you first hear “HODL strategy,” you might believe it to be a typo. A bitcoin forum was the scene of the incident, which took place in 2013.

The incident occurred in 2013 on a bitcoin forum. At that time, a forum user called Game Kyuubi made a post with the sentence "I'M HODLING" adhering to a buy-and-hold strategy.

The sentence is a typo because it should be "I'M HOLDING". However, this sentence is discussed and continues to be confirmed as a term that is not wrong in various forums.

In fact, it was just an expression of disappointment because the price of bitcoin had fallen after it had risen drastically.

During that time period, in 2013, the price of bitcoin increased from $15 to $1.100 in the period from January to early December.

However, the price of bitcoin then plummeted in mid-December 2013 to 716 dollars. This incident upset many people and caused Kyuubi Games to post its dissatisfaction.

Despite the fact that the phrase “I AM HODLING” is wrong, the Kyuubi Game shows the correct action.

Finally, the price of bitcoin reached a record high of $19.167 at the close of 2017 according to the data. HODLers may be confident that the price of bitcoin, which hit $58.000 in early 2021, will not fall below that level.

HODL Strategy and Philosophy

The HODL strategy is built on the philosophy of not trading assets based on short-term price fluctuations, as Kyuubi Game does.

The HODL strategy is based on the idea that holding an asset has a lower potential for loss than exchanging it quickly.

By implementing HODL, trading will prevent fear of missing out (FOMO) and fear, uncertainty, and doubt (FUD).

When it comes to cryptocurrencies, a world of missing out (FOMO) will cause investors to become overconfident and overpay for the asset. Due to the fear and reluctance generated by FUD, companies will be more willing to sell at low prices.

Instead of “Holding on for a Dear Life,” it might be more wrong to hold a “Holding on for a Better Life” HODL to emphasize the need to hold these assets.

Advantages and Disadvantages of Using HODL

If an investor believes that the crypto assets he owns will increase in value in the future, then he can use the HODL strategy. In this case, investors do not pay much attention to price fluctuations in the short term.

However, investors need to study the fundamentals of the crypto assets they own, as well as their investment objectives. This is very important to determine the investment strategy that will be used.

However, the HODL strategy does not guarantee to provide 100 percent profit. Investors need to carefully consider the possible advantages and disadvantages of using a HODL strategy before implementing it.

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Investors' Objectives in HODLing

The main goal of HODLers is to gain long-term profits while encouraging hodlers not to sell their assets.

That way, they can avoid the risk of buying expensive and selling cheap which is often experienced by beginners. The reason is simple, namely HODL can make asset prices higher.

HODL can be likened to a commodity that is hoarded by middlemen. When the number of goods available on the market decreases, prices will tend to increase as demand continues to increase.

However, risks can also occur, such as the existence of alternative or substitute products. Therefore, investors must still pay attention to risks, such as changes in regulations or public viewpoints, even though HODL seems safer.

It is important to remember that HODL can provide large long-term profits, but it still requires careful calculation and consideration.

Otherwise, this method can lead to big losses. Therefore, HODL cannot be done carelessly or just because you want to hold assets for a long period of time, but must be based on a mature investment perspective and strategy.

Conclusion

HODL is a term used in the bitcoin world to denote assets that you may not sell any current assets.

That's the article about what HODL is and its purpose in Cryptocurrency investment, hopefully the article above can be useful and helpful for all of you.

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Nafa Lightyani

I am a content writer for SEO, Technology, Finance, Travel, Cooking Recipes and others. I hope this can be useful for all my friends.