There are numerous terms and jargons in the cryptocurrency world that are difficult to understand. You must have read or heard these words being used by crypto traders and investors on different social media platforms or websites, but would not have heard them anywhere else in your life. Among all these terms you must have come across the word ‘HODL’. And then you would have wondered why people are misspelling ‘hold’ as ‘hodl’, even when they have an auto-correct feature on their devices. Actually, it is a term which is derived from the word ‘hold’.
In the cryptosphere, a new lingo has developed. You might feel left out if you join a group of crypto without knowing these terms. So, in this blog, we will be taking you to an intro of HODLing.
What is HODL?
HODL is a slang in the crypto community. It is a term derived by misspelling ‘hold’. HODL refers to the buying of coins and then holding them rather than selling. The term originated with a post in December 2013. The post was made by an apparently drunk user who said: “I am HODLING.” Quartz listed this term as one of the essential slang terms in Bitcoin culture in 2017. Originally it was used in relation to holding Bitcoin, but now it is also used in reference to holding other digital currencies as well.
Investors purchase a number of currencies for a low price when there is less or no demand. Then, after holding it for many years they witness a great return on this investment. This strategy, in the end, does turn profitable, but the actual truth is that coins go through several ups and downs before reaching a desirable price. If traders take advantage of these highs and lows, it is possible that a considerable amount of new coins could be added in their pockets with profit still in their hands.
If you are interested in simply investing and not doing much work on your side, then HODLing method is probably the right choice. Investors who are HODLing, should keep themselves updated on their investment, in order to make a coin or token swap. Usually, you will not get much time to participate in such an opportunity. So, don’t miss the opportunity because if you do, your investment will become worthless. You can stay updated about such events from social media platforms like twitter etc. Conducting fundamental or technical analysis may also be beneficial.
How to know when to keep HODLing?
If the digital asset that you have chosen is going through a rough time and you have lost a notable amount of profit, it is still unwise to get rid of your investment. Some traders liquidate their holding for little or no profits when the prices start to decline. They perform such activity in order to prevent further losses on their investment. Whereas actually, panic selling should be avoided because all types of market trade in a cycle and the same goes with cryptocurrencies. If your asset is seeing a decline in prices, it will surely see a positive increase soon. So, if you were planning to dump your investment just because it is going downwards, you may miss the upward going market, which would come back shortly. Many impatient traders have become a victim of this and suffered losses or marginal profits.
In order to analyze whether you should sell the coin or not, first, take some time to assess your position. If you need money immediately, you should probably have not invested. And if you don’t, then hold on to your tokens or coins for a bit longer. Possibilities are there that in a few days or months’ time, you may be able to sell coins in a much better spot. In order to gain profits, you have to wait and hold on.
How to know when to sell?
It is a good decision to sell your asset when it experiences a sharp increase in a short span of time. This will make you gain some profits. If that increase in price has no demand to keep holding for, then it is smart to sell at least some of your coins so that you can buy them back at a lower price. This strategy would probably double the coins’ amount that you hold. And could increase your crypto portfolio position when the asset reaches your target selling price.
At this time, you can also diversify your portfolio, if you have invested only in one or two projects. By selling and buying again, you have the chance to recover your original investment, and also add a new position in a different project. By diversifying your investments, you protect yourself from facing loss by one asset. All these strategies are beneficial for experts as well as casual investors.
When you look at a cryptocurrency’s long-term price chart, you can construct a quite routine pattern of asset trading up and down. This could give you a good evaluation of when to buy or sell coins so your position increases.
In conclusion, we can say that HODLing is probably the best way to earn more gains. HODL is sometimes explained as the acronym for ‘Hold On for Dear Life’. So, better hold on your coin rather than hurrying up and gaining no or lower benefits than you could have earned with some patience and endurance. Most of the huge financial gains are not earned overnight. You have to be patient to evaluate your project so that it could turn out to be advantageous in the future.