How to Hodl: Earn and Save in Crypto
Holding is a long term crypto investment strategy where individuals hold cryptocurrencies without trading them on a daily basis.
Crypto investors can hold their tokens/coins for up to ten or more years.
Hodlers benefit from the appreciation of the crypto assets they hold.
It is best to manage digital assets using hard wallets.
Keywords: Hodl, save in crypto, Hodling, investment strategy, hold on for dear life, hodler, hold strategy, hodl strategy, BTC price
Introduction
There are different ways of investing in cryptocurrencies. Nevertheless, these methods have varying rates of return and risks. Therefore, cryptocurrency investors should undertake their own research before putting in their funds.
In this piece, we will discuss one of the safest ways of investing in cryptocurrencies called HODLING. We will also explore various reasons why new crypto investors should use the hodling investment strategy.
What does Hodling mean?
Hodling is a term derived from the word hold and means an investment strategy where someone buys a cryptocurrency and keeps it for a long period anticipating that its value will rise in the future. With HODL, which also stands for “Hold on for Dear Life,” investors hold on to their cryptocurrencies while ignoring short term price fluctuations. They can keep their cryptocurrencies for a period of more than one year. Some people prefer to hold on to them for up to ten or more years waiting for the cryptocurrencies to reach their target values such as 50% increase. Once the prices of their crypto assets reach the intended target value they sell them.
The hodling strategy, also referred to as the holding strategy, is one of the safest crypto investment strategies which is suitable for new investors. It is the opposite of “time the market” where traders buy and sell the cryptocurrencies within a short period. For example, they can sell them within hours, days or weeks to profit from small gains. In other words, they resort to short term trading investment such as high-frequency trading, day trading and swing trading.
In most cases, the hodlers are not swayed by market sentiments such as sharp downward price movements. They do not panic, for example, if they hear news that may affect the value of the cryptocurrency in the short run. Primarily, hodling is similar to the buy and hold strategy used in the stock market where the investors “HODL the stocks.”
Exemplifying the benefits of the HODL strategy
There are various statistics that support the importance of using the hodling strategy. For example, the long term price movement of Bitcoin indicates one advantage of hodling. Although the BTC price had short term price swings its value kept on increasing over the years.
For example, during the beginning of 2019 Bitcoin had a price that was less than $10,000. However, its value rose above $40,000 in 2021 although it retraced back to the current price of between $26,000 and $28,000. What this means is that someone who purchased Bitcoin in 2019 and sold it in 2021 would have gained over $20,000.
In this case, such an investor would have amassed a profit of more than 50% within three years. At one time, the price of BTC reached an all-time-high of $69,000 in November 2021. That would mean a profit of over $50,000 for someone who sold his BTC in November 2021.
With certain cryptocurrencies hodling means that someone gains in two ways. If someone stakes his/her tokens he/she can earn an annual reward for that while hodling them. This is because their prices may rise over time.
The concept here is you hodl as well as stake your tokens. Some investors may also join crypto saving programs where they receive a reward for their tokens while hodling them. However, the investors who want to hodl their cryptocurrencies while investing them in other less risky investments like saving should do so with secure crypto exchanges like Gate.io.
The origin of the term HODL
The term hodl is purely related to cryptocurrencies because it emerged during a crypto community discussion in 2013. It originated during a chat in Bitcointalk forum when someone, by the username GameKyuubi, wrote “I AM HODLING instead of “I am holding.” He meant that he was holding Bitcoin, waiting for its appreciation.
From there, the term became a buzz word among crypto enthusiasts who used it during various discussions in different social media platforms. Hodling became a rewarding investment for GameKyuubi since the BTC price rose from around $1,000 in November 2013 to $19,000 in early 2021 before rising to over $69,000 in November 2021. The graph below shows the price movement of BTC since 2014.
Bitcoin price movement - Globaldata
According to Globaldata, the price of Bitcoin was around $1,000 in 2014 and increased to $60,000 in November 2021.
Hodling as a safe crypto investment strategy
As said, hodling is safer than most crypto investment strategies which are on the market at the moment. Nonetheless, the investors should search for the best cryptocurrencies to invest in. This is because some tokens/coins are more volatile than others. For instance, memecoins like PEPE, Dogecoin and Shiba Inu are very volatile since they do not have intrinsic utility.
On the other hand, utility tokens like ETH, MATIC and ADA are more stable than other tokens/coins which do not drive blockchains or decentralized applications. A simple approach, therefore, is to invest in cryptocurrencies that are within the top 20 based on market capitalization. However, one should also research their functionalities and market trends. Generally, cryptocurrencies that are within the top 100 by market capitalization promise more than the recently launched ones.
For you to avoid being swayed by emotions when the market is volatile you should set a target profit say 30%. Once the cryptocurrency attains that value you sell it. If the price of the token falls you can purchase more of it through the buy-the-dip strategy. Therefore, instead of panicking when the price of the cryptocurrency drops you capitalize on that to increase your holding.
However, it is important to note that there is no-one-size fits all crypto investment strategy. The investment method one chooses depends on his/her goal and experience. Generally, though, the hodling strategy has proved to be a better strategy to beginners than the other crypto investment methods.
Also, hodling becomes more meaningful to people who develop an ideological belief in a certain cryptocurrency like Bitcoin. For example, Bitcoin maximalists can choose to hold their BTC for long periods of up to 10 or more years.
How to hodl cryptocurrencies
There are several tips that can help you to become a great crypto hodler. Once you grasp these and implement them you will never look back on holding your preferred crypto assets.
Be prepared for volatility
Almost all cryptocurrencies including Bitcoin and altcoins are very volatile by nature. They experience big upward price swings which translate into huge profit. Sadly, their prices may also swing downward in a significant manner. For example, BTC can fluctuate by up to 30% per day at certain times. Therefore, a hodler who is prepared for price volatility will not panic when such price swings occur.
Use a hard wallet
The other important thing to do is to use hard wallets to hold your crypto assets as they are hack proof. Keeping your digital assets in hot wallets is risky since malicious actors may steal them through hacking and other means such as phishing. Even if a hacker gets access to your computer he/she will be unable to steal the digital assets that you manage using a hard wallet.
Long term thinking
Successful hodlers should have a long term investment focus to cater for different crypto cycles. For instance, Bitcoin has a four year market cycle. Therefore, an individual investor should check the performance of the cryptocurrency right round the full cycle to benefit from price upswings. As you notice, one should have a strong mentality to hodl cryptocurrencies like ETH and BTC.
There is no need for day trading
As we discussed above, successful hodlers should not day trade their cryptocurrencies. Additionally, they do not need knowledge of technical analysis or charting. The essential thing is to check the cryptocurrency’s long term price changes.
Never Buy When Prices Are High and Never Sell When Prices are Low
One key principle of investing in cryptocurrencies is to buy a crypto asset at a low price and sell at a higher value. This ensures that you make a profit at all times.
Get involved in communities
Most crypto projects create communities online which you can join and participate in. There are different groups, channels and forums like Bitcoin Talk. Some of these exist on Slake, Discord, Telegram, Facebook and Twitter. When you participate in them you remain updated on the current crypto market trend which enables you to make the best investment decisions.
Other Crypto Slang Terms
Hodling has been one of the popular crypto slang of all times. However, there are other crypto slang terms you need to understand as they will guide you when you carry out further research. These include FOMO, mooning, diamond hands and paper hands.
Diamond hands: These are memes which crypto and stock traders popularize on Reddit. They create a common bond among the traders to hold on to a cryptocurrency even if there is a high selling pressure.
FOMO: It is an acronym of “Fear of Missing Out” which refers to a strong willingness to buy a cryptocurrency when most crypto enthusiasts are talking about a possibility of a strong increase in its value. They will be afraid of missing out on a big investment opportunity.
FUD: This stands for fear, uncertainty and doubt. FUD occurs when people are talking negatively about a certain investment asset such as a cryptocurrency.
Mooning: This is a term that refers to a high possibility of a sharp rise in the price of a crypto asset like Bitcoin. When people say going to the moon they mean that the price of the cryptocurrency is likely to rise soon.
Paper hands: These are investors that sell their cryptocurrencies earlier than planned as they are afraid that their prices may fall sharply in the near future.
Buying the Fucking deep (BTFD): This means buying a cryptocurrency when its price has dropped significantly.
Hold the line: This is a statement or mentality of encouraging other crypto investors to hold on to a cryptocurrency even when there is a high chance of a sharp downward price swing.
APES: The term refers to members of a particular crypto or NFT community.
YOLO: This means that you only live once. This is an encouragement for people to buy cryptocurrencies at that time.
Pump and Dump: This means a coordinated effort by a group of investors to push the price of a cryptocurrency up then sell their holdings before the price drops again.
Hodl and Earn at Gate.io
Gate.io has a flexible hodl and earn one-stop platform where investors can lock their cryptocurrencies and earn a specific return over a period of time such as 60 or 90 days. However, the investors can even lock for shorter periods than that like 7 days. With this, they have a chance to invest in major cryptocurrencies like BTC, ETH, Gate Token (GT) and Tether USDT, among others. As a result they can earn up to 8% of the cryptocurrencies they lock through this investment programme.
Conclusion
In summary, HODLING is a long term investment strategy used for cryptocurrencies. Crypto holders do not focus on daily fluctuations of a crypto asset. Rather they wait for the appreciation of the digital asset over a long period such as five years. Nevertheless, to reduce risks associated with crypto hacking the investors may keep their cryptocurrencies in hard wallets.
FAQs about hodling
What is hodling strategy?
A hodling strategy is an investment method where someone buys a cryptocurrency and keeps it for a long time while waiting for its price to rise to a certain level. Crypto investors can hold their cryptocurrencies for a period of up to ten or more years.
Is HODL the best strategy?
Hodl is a safe strategy since someone keeps the cryptocurrency for a long time until its value rises to a preferred level. The investor is not concerned about the short term price fluctuations but the long term value of the crypto asset.
