As you become acquainted with the cryptocurrency industry there will be several new phrases added to your vocabulary. One of them is Hodl. While not a term used in the traditional finance industry, we'll cover the reason why hodl has become a treasured part of the cryptosphere. In this article, we explore the history of the infamous term, what it means, and why every crypto trader should be learning about the concept.
What does hodl mean?
Hodl refers to holding a particular digital currency for a long period of time in order to make money from the price gains. In recent times, many in the crypto community have built the acronym into Hold On for Dear Life, however, this is not part of the origin story.
Hodl has become synonymous with not selling a cryptocurrency during a bear market or period of heightened volatility. The term has become widely adopted by the crypto community and can be seen used in content across all platforms and calibres.
Where does hodl come from?
Hodl was first conceptualised in a BitcoinTalk forum in 2013 when a user by the name of GameKyuubi misspelt the word “hold”. The inebriated user posted the following message:
“I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," GameKyuubi wrote about the now-famous misspelling of "holding." "WHY AM I HODLING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.”
In 2013, the price of Bitcoin went through a volatile period, soaring from $130 in April to $950 in December. The user encouraged fellow Bitcoin investors not to sell and rather “hodl”.
Within an hour of the post, the new term had become a widespread meme and continues to be used a decade later.
Hodl as a trading strategy
In cryptocurrency investing, price volatility is a constant concern. However, the concept of "hodling" offers a strategic approach to weathering these fluctuations. Hodling refers to holding onto your investments for an extended period, regardless of short-term price movements. Despite market ups and downs, hodling can provide stability and potentially lead to long-term gains. This strategy allows investors to navigate price volatility with patience and confidence in future growth.
The concept has been widely adopted by a large portion of the Bitcoin and greater cryptocurrency community as a strategy to earn gains. For Bitcoin maximalists, it’s a way of life. Many maximalists have taken on the hodl strategy to avoid any profit-eroding moves, including reactions to FUD (Fear, Uncertainty, and Doubt) and FOMO (Fear of Missing Out), more on this later.
When is the best time to hodl?
Much in the same way as the Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now,” the best time to hodl is now. As an investment strategy, buying and holding an asset in any market is always believed to be lucrative as its value grows over time.
Hodling is an ideological belief in the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them. Some stock market traders have even adopted this mindset, although the term "hodl" remains predominantly used when referring to crypto.
Other important crypto terms to know
As you continue to build your crypto vocabulary, here are several other terms you are likely to come across. These include:
BTFD (buy the f***ing dip)
A slang term commonly used on Twitter, BTFD encourages traders to buy when the prices are low (when coins are in a dip) with the intention to make profits when the prices return to normal levels.
FUD (fear, uncertainty, doubt)
As mentioned above, FUD refers to misinformation spread by individuals and organisations that typically encourages traders to sell.
FOMO (fear of missing out)
Content creators or the mainstream media might use FOMO as a way to entice people to buy a coin. They play on the emotion that traders might miss out on big profits or the next big thing.
Lambo
Short for Lamborghini, lambo refers to asset prices becoming so high that the user can sell them and buy the luxury vehicle. “When Lambo?” is a common phrase which asks when the price is going to reach such levels.
To The Moon
Used to describe prices reaching extraordinary levels, as if they’re going so high they’re going to the moon.
Whale
A crypto whale is an individual or organisation that holds a large amount of a particular cryptocurrency. This is generally considered to be around 10% of that cryptocurrency's total supply.
Closing thoughts
Hodling refers to a buy-and-hold strategy created from a typo in a BitcoinTalk forum in 2013. The concept remains relevant a decade later with many traders and maximalists opting to use this approach. The goal of hodling is to experience the benefits of substantial price gains and mitigate volatile markets.
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