How To Hodl Crypto Safely And Still Make Profit 


5 mins read January 16, 2023

To hodl simply means to "hold on for dear life and if it seems like a grammatical error, you're almost right. There is a famous story behind the term emerging on a Bitcointalk forum on December 18, 2013, when a user, GameKyuubi, mistakenly posted “I AM HODLING” after the bitcoin price had an unpredictable price movement during the year. 

It was in reaction to a challenge most traders faced as it seemed a wrong choice trying to predict the market. It turned into a viral meme as bitcoin somehow yielded best for those who hodled that year from $15 to about $1100

As a crypto investor, this strategy encourages you not to sell because of short-term volatility but rather to do so when it appreciates. Continue reading to find out how to use the Hodl strategy to make money with crypto. 

What Is Hodling Strategy?

The hodling principle isn't a new one anymore in the crypto market. As we already know, it is a means of buying a crypto asset without selling it over a prolonged time, irrespective of market fluctuations. In crypto, people who hodl on a project token are often called diamond hands. If not for anything, hodling prevents one from panic selling a crypto asset too early.

There is what many call the "time the market" concept in the crypto space. This is mainly used by crypto traders and investors who prefer to buy and sell cryptocurrencies on a short-term basis. 

For those seeking to know everything about "what is hodling strategy", the "time the market" concept is different from it. Instead of the strategy working on a short-term basis, it works on the appreciation of value a cryptocurrency gains in the long term. 

To keep to this strategy, you need to prevent crypto market sentiments from swaying you away. Sometimes when there is a dip in the crypto market, this strategy might be hard to follow as you may be faced with the decision of either Hodl or sell. To avoid this, crypto investors making use of this strategy usually don't make use of third-party services to store their crypto. They use cold wallets instead of hot wallets to reduce the tendency to think about selling during a dip in the market. 

Is Hodling a Safe Strategy? 

Unlike traditional financial institutions, no centralised authority oversees all the crypto industry's operations and activities. Also, cryptocurrencies are very volatile, one minute, the price of a coin might be $110, and the next, it may reduce to $25. These are why people ask questions like "is hodling a safe strategy?" 

Apart from very few exceptions, hodling is generally an excellent way to profit in the crypto space. All you have to do is find a cryptocurrency with strong potential and a community backing it up. The next step is to invest in cryptocurrency. You do this by buying into its idea and supporting it. Afterwards, you simply wait for an extended period for the value of the cryptocurrency to appreciate before you can decide to either take your profit and keep holding the capital or sell all the crypto. This does not mean that there are no risks associated with this strategy, but it is generally safe, especially if you are a beginner in crypto. 

To Hodl or Not To Hodl?

There is no one-size-fits-all strategy in profitable crypto investment. Many have gained and lost money hodling, and the same for those buying and selling in shorter terms such as Day Trading. Your investment or trading goals and experience will determine whether hodling is a good strategy. 

However, the hodl strategy is a proven good strategy for the majority as timing the market is relatively difficult or impossible. It is usually a better investment strategy for crypto trading beginners

Things To Do When Hodling Crypto Long Term For Profit

Hodling cryptocurrencies are not as easy as it looks, although the process is not as stressful as short-term trading. To hodl profitably, there are things to note, and these include:

  • Choose Cryptocurrencies Wisely:
    Hodling doesn't mean you should just find a cryptocurrency and then invest in it without proper research. Most of the time, a strong community and a good project make the price of a cryptocurrency increase in the long term. While investing, do thorough research and find a cryptocurrency that will stand strong despite price volatility and appreciate it in the future. 
  • Make Use Of a Cold Wallet:
    Instead of using your standard wallet, also known as a hot wallet to store cryptocurrencies, you could use a cold wallet to hodl your crypto. Doing this reduces the ease and thoughts of selling off your crypto, assuming there was a dip. If you are using a hot wallet, you may likely be checking your portfolio from time to time, and if there is a significant dip, it will be hard to suppress the thought of selling. 
  • Don't Buy When Prices Are High And Don't Sell When Prices are Low:
    This is quite explanatory. If you are planning to hold cryptocurrencies long term, you need to stop buying when the price is high and don't sell when the price is low. Dollar-cost averaging and buying in a bear market are better ways to ensure you're buying your crypto at a discount.  
    While you avoid following the majority panic sell in a dip, there are exceptions to this rule. Whenever you know that there is a rug pull or the project behind the cryptocurrency is dead, sell and move on. 


Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.

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