HODL
Candlefocus EditorSince then, the phrase has become the rallying cry for long-term investors and the embodiment of a core crypto belief that the value of digital assets will go increasing in the future.
HODLing generally involves buying crypto assets and holding them for long periods of time regardless of market conditions, rather than actively trading them for short-term gains. Proponents of HODLing argue that it provides greater potential ROI over time than active trading, as long as the asset is fundamentally sound and has potential to increase in value.
HODLers generally attempt to buy low and hold, investing in crypto assets that they believe will rise in value over the long-term. While HODLers may sell some funds when the market reaches their desired price, they keep the majority in order to benefit from any potential increases.
In addition to potentially higher returns, the HODL approach is beneficial because it takes emotion out of the equation. In a volatile market where prices can display extreme fluctuations, it can be tempting to make unpredictable decisions. By adopting the HODL approach, traders remove the emotional component and make decisions based on research and fundamentals, rather than immediate reactions.
HODLing is particularly popular in the crypto community due to its potential for auto-compounding returns. Since digital assets like bitcoin typically have limited supplies, holding them for long periods can potentially result in substantial profits, as the amount of available units decreases and demand rises.
HODL, then, is the strategy of buying digital assets and holding them through thick and thin, suggesting that investors will profit from potential long-term gains rather than succumbing to the vicissitudes of markets. Although HODL does come with certain risks – especially in a volatile market – its potential for higher returns makes it one of the most popular investment strategies in the crypto space.