HODL may not be the right approach for every crypto investor and every cryptocurrency. Only time will tell whether they ever recover. Several altcoins that soared during the 2021 crypto boom, such as Dogecoin (DOGE), Avalanche (AVAX) and XRP (XRP), are down more than 88% from their all-time highs. Once-popular altcoins like OneCoin, BitConnect and TerraUSD are just three examples of cryptos that failed, generating a near-complete loss for any investors who employed the HODL strategy. “The same can’t be said for all other cryptos, however, as most of them will likely go to zero.” “HODLing is a good approach to Bitcoin investing if you believe in its long-term prospects and are prepared for some volatility along the way,” Turner says. Harry Turner, founder of The Sovereign Investor, says the key to Bitcoin’s long-term investing outlook is its leading market position and its fixed supply. Value investors rely on fundamental metrics like price-to-book (P/B), price-to-earnings ( P/E) and price-to-sales (P/S) ratios to estimate the intrinsic value of a stock.īitcoin does not generate cash flow, revenue or earnings, and it’s not backed by assets that create intrinsic value, making it difficult to predict its appropriate long-term value. However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. The “Oracle of Omaha” famously encouraged investors never to own a stock for 10 minutes that they wouldn’t be comfortable holding for 10 years. ![]() Value investors like billionaire Berkshire Hathaway CEO Warren Buffett also ignore short-term market volatility and focus on the long-term picture. Ignoring short-term market fluctuations and focusing on the long-term outlook is not a strategy that is unique to the crypto world. But investors who were spooked into selling their BTC in past downturns have lived to regret those decisions. Today, Bitcoin prices are also down 59% in 2022 as rising interest rates have triggered a sell-off in cryptocurrencies and other risk-on assets. The original crypto plunged to $4,000 before ending the year around $29,000. For example, Bitcoin shed 50% of its value in less than 48 hours of the Covid-19 pandemic-induced sell-off in March 2020. Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment.īut Bitcoin’s gains don’t come without years of “HODLing” through stomach-turning losses.īitcoin’s extreme volatility has produced a handful of horrendous annual returns throughout the years. Since the original HODL forum was posted in December 2013, Bitcoin prices are up about 2,500%. There’s no question the HODL strategy has paid off well for GameKyuubi and other Bitcoin investors that have held onto their crypto investments. “Since Bitcoin was designed to be the ultimate hard money, most of the daily volatility is just the noise that comes from the most free market in the world responding to events in real-time.” The HODL community encourages other investors not to cash out of their crypto when prices rise and not to throw in the towel when crypto prices fall. “To HODL is an acknowledgment that while a lot of money can be made trading short-term volatility, a lot of money can also be easily lost,” Gagnon says. The HODL approach has been rewarding for long-term investors in Bitcoin, Ethereum (ETH) and other leading cryptocurrencies, as it’s helped them navigate extreme fluctuations in the crypto market.īen Gagnon, chief mining officer for Bitfarms (BITF), says HODL is more of a mentality than an investing strategy. The meme also acknowledges novice crypto investors that they are not skilled enough to profit from short-term trades amid the notoriously volatile crypto market. ![]() What Does It Mean To ‘Hodl’Ĭrypto investors quickly retrofit HODL as an acronym for “hold on for dear life,” an encouragement to other crypto investors not to sell when prices fall. Today, it refers to investors who refuse to sell their crypto regardless of how high or low prices trade. In no time, the term HODL spread like wildfire throughout the crypto world. GameKyuubi explained in the post that he planned to “hold” his Bitcoin (BTC) investments because he knew he was a bad trader. It all started when a user named GameKyuubi made a post on the crypto forum Bitcointalk in December 2013 with the title “I AM HODLING.” In addition to this, you will also earn daily rewards in $BNB.As with many other popular memes, the origin of HODL can reportedly be traced back to a typo. Simply hold $HODL tokens in your wallet and you will get more. HODL works on an autonomous frictionless yield farming and liquidity generation protocol.
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