Why HODLers Will Never Sell Their Bitcoin

HODLers? Yes, that’s not a caps lock error. In the wonderful world of crypto, there’s an avid group of Bitcoin investors that will never sell. Whether the price rises or falls, HODLers always hold on to their Bitcoin stack. They are the long-term investors of the crypto world.

In this article we look at the origin of the term HODL, how it works as an investment strategy and whether cryptocurrencies like bitcoin could be a part of your long-term investment strategy alongside stocks and ETFs.

Before we go deeper into the HODL strategy, let’s go back to basics: what is Bitcoin anyway?

Bitcoin in a paragraph :bitcoin_png:

If you want to compare Bitcoin with another investment product, gold is the closest comparison. In the financial world, some people refer to Bitcoin as digital gold or gold 2.0 because it has a fixed and finite supply. But Bitcoin is more than that. It’s not only a store of value, but also a fully decentralised payment network and a form of digital money. Bitcoin is based on open-source technology and operates without a central authority. This means that no one, not even a government or central bank, owns and controls the network. There will be a maximum of 21 million BTC ever created. That makes the coin scarce (similar to gold) and that’s why investors find it interesting.

Back to the HODLers.

Where does the term HODL come from? :man_shrugging:t4:

The term HODL was accidentally coined in 2013 by a user named GameKyuubi on the Bitcointalk forum. In 2013, the bitcoin price was quite volatile. The price rose that year from just over $100 in April to over $1,100 in early December.

On December 16, 2013, the Chinese government introduced a law banning payment companies from working with Bitcoin exchanges. It sparked a wave of volatility. GameKyuubi posted a message two days later on December 18th with the title: “I AM HODLING”. He was suspected to have made a typo, but he kept writing “HODL” in his posts.

GameKyuubi wrote in a series of posts that day that he would hold onto his Bitcoin investments forever and that he didn’t consider himself a short-term trader. His statements went viral and were made into hundreds of memes. Now, the word HODL has forever entered the vocabulary of Bitcoin investors.

The HODL Strategy :writing_hand:t4:

HODL is now the accepted term for investors with a long time horizon. HODL is also used as an acronym for Hold On for Dear Life.

The phrase has now become a mantra among long-term crypto investors. When the prices are volatile, the HODLers yell, “HODL!”. A true HODLer also ignores the biggest price swings. The strategy here is that many don’t believe in timing the market because they don’t have the skills to trade short-term movements. Others want to wait until Bitcoin is accepted as money by governments around the world.

Can you HODL stocks and ETFs? :bellhop_bell:

Although this started out as an internet meme, the HODL strategy is very similar to the traditional ‘buy and hold’ strategy that investors use for stocks. In this case, investors buy stocks for the long-term and rarely, if ever, sell them. In that respect, the strategy is the same. However, there is one difference. Until recently, stock prices have traditionally been less volatile than crypto.

When investors buy and hold stocks, they get exposure to long-term price appreciation while experiencing much less price volatility than crypto. So if you plan to HODL Bitcoin, be prepared that your investments may fluctuate in value.

Crypto as an addition to your portfolio :bar_chart:

Let’s say you want to invest for the long-term, but you want to limit your risk. Is there still space for crypto in your portfolio? Yes! You can make crypto a small part of your larger strategy, with an amount of money you can afford to lose. That way, it’s balanced out with a diverse portfolio.

Investing in crypto? :moneybag:

Of course, make sure you only invest money you can afford to lose. Cryptos are still very volatile. In our Knowledge Centre, we give you all the tools you need to make informed decisions. And it’s completely free, so take advantage of it!

Do you like to HODL your (crypto) assets? :thinking:

  • Yes
  • No

0 voters

Which (crypto) assets do you like to HODL? :smirk:

  • ETFs
  • Stocks
  • Bitcoin, Ethereum, Litecoin etc.
  • (BUX/DeFi) tokens
  • NFTs
  • Others

0 voters

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.

4 Likes

I HODL all the stocks I buy, unless the investment thesis changes drastically. That is to say if the company just goes off into a completely different direction from the one my investment research was built upon.

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I have been following the prices of both crypto and USA stocks closely for a long time. And I have to say that in the last year it has definitely become way more correlated to each other. Which is definitely a good sign for crypto, meaning it has become at least a little more mature. Of course its more comparable to mid/high P/E stocks atm. But I’m very curious if volatility will become even less over the coming 5 years.

At least It doesn’t drop as hard as my Netflix did… :rofl: (But that’s why we diversify ^^)

4 Likes

Great article @Fergus :fire:

Personally I will HODL my BUX Tokens as long as BUX adds more and more crypto-related functionality to their platforms and builds out more and more utility for the token.

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I’ll HODL NFTs once BUX decides to build a great user experience around them :eyes:

5 Likes

Right now in crypto I would only HODL Bitcoin. Only coin I think is exceptional. Why? It’s truly decentralised and proven to be secure. If institutional investors invest in crypto it will mostly be in bitcoin.

Ethereum I’m not sure about. Because of high gasfees I don’t see it as viable retail option now. I avoid using it. Maybe as a network to build DAPS on but for retail it’s too expensive. And it has good competition. Avax, Cardano for example.

I buy other cryptos but I trade them when it’s opportune to do so. Some are gaming and metaverse. A game doesn’t have a shell live of 20 years. Most have a few years at best. Buy them low and sell when you can.

NFT might have a future but right now there are a lot of bad investments there. I dont go there.

Only Bitcoin is one a kind. My opinion at least.

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I’m personally still a fan of Ethereum. Got by far the most use case and users at the moment. And for gasfees we have layer 2’s like polygon that can make it at least bearable for now. But this should definitely be their nr 1 priority to fix.

As for btc, I’m personally not a big believer. Maybe it can because the digital gold. but I definitely don’t see it as a payment currency. I don’t really believe in this whole decentralized idea. If the government wants your money they will get it anyways. :sweat_smile:

But hey, maybe I’m wrong. I don’t mind if I am! That probably means my alt coins also go up! :grin: But for now I’m still betting on the flippening.

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I see the future of Bitcoin as the base layer of the world’s digital money. There will be layers built on top that make it more scalable. It is almost impossible to stop completely.

There are two comparisons you can make that illustrate how hard it is to stop: the first is global tax evasion, and the second is digital piracy. The first is hard to stop because countries will never align their laws when it comes to fighting it, and the second has survived because peer to peer technology makes it too expensive to battle (you’d have to punish almost every single user).

The same two reasons make it hard to stop Bitcoin as well.

3 Likes

Bitcoin as digital gold I also don’t believe in. The markets tell us they see it as a tech asset. And in the end the markets are always right. That said I believe in Bitcoin is a truly decentralised and secure way to make a payment. Without a centralised party between.

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I don’t really agree with the sentiment that the market is always right though. I knew a time where Tesla was shorted by pretty much everyone. And there are many cases where bubbles are formed that might or might not recover. (The techbubble is a beautiful example of one that actually did recover, but many don’t).

There are a few massive issues with the fact that Bitcoin is so called ‘decentralised’.

Its a nice idea, but what happens if you lose your wallet for example. I think things like Healthcare and Pension funds have shown us that it is better to not leave every responsibility up to the citizens. Especially not when they can have life changing effects.

The whole idea of ‘centralised party between = bad’ I always find very strange.

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Well I would say those who went short bet against the market and lost.
I’m certainly no libertarian and mostly I don’t have a problem with centralised entities in most cases. However history has shown. Power corrupts and absolute power corrupts absolutely. With payments going digital more and more we are going to a society where everything we do is controlled and watched by centralised organisations. Be it government or companies. Seeing history I do no assume my interests are always the same as the centralised powers.

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