What is the HODL?

What is the HODL?

HODL is a word widely used in the world of cryptocurrencies to describe the act of buying and collecting coins so as not to spend them. This in order that as they increase in value, see how the initial investment begins to revalue quickly.

And in the world of cryptocurrencies you can find two types of people: those who want to invest their funds in cryptocurrencies and hold them for a long period of time, known as HOLDERS . And those others who want to take advantage of the volatility and fluctuations of the system to generate profits by carrying out different operations, known as TRADERS . Well, in this chapter we will study the first group, known as HOLDERS .

The word HODL (from the English HOLD, but misspelled) is very frequent among users and investors of cryptocurrencies, mainly Bitcoin . And it refers, specifically, to the firm decision to acquire an asset and keep it over time. In Bitcoin, this decision is seen as an investment philosophy, which allows users to exponentially multiply their assets in the near future.

The Beginnings of The Hodling

By 2013, when Bitcoin was suffering large declines in prices, user BitcoinTalk, GameKyuubi , he wrote a thread that began with the following expression: "I AM HODLING" . In the thread he made reference to that he would keep his bitcoins and not sell them even if the price continued to fall. In his message, he explained to the community the reason for his decision, also acknowledging that he had made a writing error. Writing the word HODL instead of HOLD, which translated into English, means to keep or conserve.

Almost instantaneously, memes of all kinds began to appear that made reference to the words of this user. Adopting the expression "Hold on for dear life" as a phrase typical of Bitcoin investors, who would maintain possession of their coins at all costs.

HODL as an Investment Strategy

Due to the volatility of cryptocurrencies, especially Bitcoin, the decision to hodl on currencies has proven to be a very profitable investment strategy in the long term. Thus, many experts on the subject agree that it is one of the best options.

The most interesting thing about hodling is that it is an applicable strategy for investments in cryptocurrencies, but it can also be implemented in any field or investment area, such as stocks, real estate, or others. Thus, in different financial markets, many investors can be observed who maintain ownership of their assets, although there are fluctuations and falls in the markets.

It is a relatively simple strategy, buy and hold despite the ups and downs. It is done. However, it requires nerves of steel, especially in a market like cryptocurrencies, and very few people in the world manage to endure a tension and pressure of that magnitude on a day-to-day basis, both when it rises and when it falls.

In the case of Bitcoin, its price ranged between $ 0.003 and $ 0.10 per unit during the first years. And it was not until 2012 when it began to take off in value, reaching approximately $ 13 per unit. Later, in 2013, the price of Bitcoin continued to rise, reaching over $ 1,000 per unit. In those moments, the holders of bitcoins (the hodlers) began to perceive the fruits of maintaining possession of these assets. Proving that the simple act of staying away from cryptocurrencies for a while can be a very beneficial action.

Hodling vs Trading

During 2017, many investors attributed their success and profits to the operations and movements they carried out in the crypto-asset market. While others attributed it to cryptocurrency hodling. And it is that for that year, Bitcoin lived a simply incredible rise, reaching $ 20,000 USD per unit.

In this euphoria, fames were generated about two investment strategies, which for everyone, were infallible: hodling and trading. Hodling, as we have already mentioned, is the action of conserving cryptocurrencies for the long term. While trading is based on actively and constantly carrying out buying and selling operations in the market, with the aim of obtaining profits from said operations.

Although the purpose of both strategies is the same (to generate profits), each of them has its own implications. For example, hodling, being as basic as buying cryptocurrencies and keeping them for a long period, any user can implement it. While trading, having to carry out operations much more frequently to buy low and sell high, implies having a knowledge about the market. In addition, to have strategies and a much greater analysis capacity. Since in trading, a failed operation or signals interpreted in a wrong way, can mean big losses.

However, hodling users are not passive or inactive either. Before acquiring an asset for hodling, it is necessary to thoroughly research that asset. What is your project, objectives and goals; what is the work team behind the development of this project. What solution it offers in the future, and many other factors, to determine if it is profitable or not to invest in it. However, compared to trading, hodling can be a much simpler and quieter strategy as it does not require large amounts of time.

The First and Biggest Bitcoin Hodlers

The first user to use, by mistake, the word HODL was GameKyuubi , who was credited with incorporating this term into the crypto world. However, the creator of Bitcoin, Satoshi Nakamoto , is considered to be one of the first and largest Bitcoin hodlers. Since it is estimated that Nakamoto is the holder of more than 1 million bitcoins.

Next, the Winklevoss brothers are also considered great Bitcoin hodlers. Due to their statements in 2013, where they claimed that they had around 1% of the bitcoins in circulation by that time, under their power. Likewise, the CEO of Digital Currency Group, Barry Silbert , is also considered one of the biggest Bitcoin hodlers. Who claimed in 2018, that he had more than 400 million dollars in bitcoins.

On the other hand, we must not forget the exchanges and the whales , who are the largest holders of bitcoins and cryptocurrencies in the world. Exchanges or exchanges operate around $ 9 trillion in bitcoins. A figure that represents more than 6% of the bitcoins currently in circulation, and that is constantly growing. Likewise, crypto whales, which are known for their ability to influence the market, also handle a large amount of bitcoins.

HODL Today: Is It Still Profitable?

Although the value of Bitcoin, from its launch to the present, has undergone great and significant changes, many experts still consider the hodling strategy as profitable. However, today a much more in-depth study is needed on the crypto asset to be hodlear. Due to market volatility and the demand for more investment to acquire cryptocurrencies than at the beginning.

With the arrival of new cryptocurrencies on the market, many users expect a process similar to that of Bitcoin to occur. That started with practically no value and that today is trading for thousands of dollars .
However, as we already mentioned, an in-depth market study on a particular asset is necessary in order to estimate its profitability over time. It is something that cannot be taken lightly, since hodling means keeping said asset for several years to see results.

So it is important to be sure of the survival of the cryptocurrency in time. And if a user risks acquiring any cryptocurrency or token without being clear about the objective of the project and its durability, they would not be making an investment, but rather a bet. Which could be the winner or not.

Likewise, with respect to Bitcoin, others maintain hope and firm conviction in the value of Bitcoin, estimating that when the next halving arrives , its price will rise exponentially. Since the amount of bitcoins that are put into circulation every day will be reduced by half, making this asset more scarce. What will revalue the cryptocurrency.