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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.
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.
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.
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.
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.
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:
Hodling crypto long-term is one of the ways crypto investors make money. This term became popular in the crypto space in 2013 when Bitcoin was experiencing highs and lows. The concept behind this term has been adopted, and crypto traders now make a profit with it. It is not as easy as it looks; you still need to keep to some rules if you don't want to lose out while hodling. Some of these rules, such as choosing the right crypto project, using a cold wallet, and knowing when to buy and sell, are important.
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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