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What Does HODL Mean?

Mar 14, 2022

The History of HODL

As Glen Goodman reports in The Crypto Trader, the word “hodl” has a funny story.

The first time it appeared was on the most popular crypto forum – Bitcointalk, the forum founded by Satoshi Nakamoto.

To give you some background, when HODL was born the price of Bitcoin was extremely volatile:

Source: TradingView

The price of Bitcoin (BTC) had just reached one of its milestones at $1163 at the end of November and suddenly dropped to $382.21 on the same day when the word “hodl” was born.

That day, many traders attracted by Lambos and other hyped information lost their funds, because fear led them to sell – the image above clearly shows the peak in volume for that day.

On Dec. 18, 2013, a Bitcoin trader – who also informed other users that he was drunk – posted on the forum to explain why he wasn’t selling. The title of this popular post is I AM HODLING.

Source: Bitcointalk.org

HODL and Crypto

So, what is HODL? HODL has the same meaning as hold, but it applies to the crypto space.

Over time it also acquired a more specific meaning, becoming an acronym: even if HODL is the result of a typo, in the crypto space it became Hold On for Dear Life.

It is used to identify all those cases in which a trader or an investor keeps an asset – usually for a long time – without selling it.

To make a practical example, in the crypto space it seems that there are a few hodlers of Bitcoin that control most of the supply – they are whales, but in general, it can be considered a hodler any trader or investor that simply doesn’t sell.

The image above shows how powerful hodling can be. 1 Bitcoin was worth $771.4 on Jan. 1, 2014. At the time of writing – March 5, 2022 – Bitcoin is worth $39,408.98. Price variation: +5,008.76%

Source: CoinMarketCap

Why do people say HODL not HOLD?

The reason why people say HODL is straightforward: this word was born in the crypto space, and the crypto community always tries to point out that the crypto world is different.

This is done through content, different analysis, different strategies and approaches, and different terminology. Everything differentiates the crypto-system from the traditional one.

Don’t get us wrong: this is not the result of an elitist attitude, but just a way to clearly express that the crypto world has its own rules and mechanisms.

That’s why a typo became so popular, why it became an acronym and why it perfectly applies to cryptos like Bitcoin.

Why do people HODL?

There are many reasons why people decide not to sell their cryptos.

One of these reasons is staking: people hold to earn interest on PoS (Proof-of-Stake) cryptos. Many times this is useful also when there are projects where staking cryptos allow traders and investors to be a part of the community that supports that project.
Hodling allows investors to spend less time – more often you trade, more time is needed to analyze each crypto.
Hodling may be the right choice for those who are not willing to be involved in risky trading activities: usually, it is worth hodling limited and reliable cryptos for which it is safe to suppose that their price will increase over time. This is related to the meaning of HODL, Hold On for Dear Life: when the price of Bitcoin starts to be extremely volatile, especially in times when a cycle is about to end, those who hodl can profit from the beginning and development of a new cycle.

Consider the image above: those who sold BTC at the beginning of 2018, for fear or any other reason, lost the opportunity to fully profit from the new cycle that led BTC to its ATH.

Source: CoinMarketCap

How to HODL

It’s very easy – all you need to do is buy cryptos and avoid selling them. Of course, always do your own research and choose reliable projects that you’d like to support in the long run.

First Step: Buy Crypto on Freewallet

Buying on Freewallet will allow you to buy easily and choose among over 100 cryptos.

You can choose to buy cryptos with your fiat currencies by using a popular payment method like Visa: just select the cryptocurrency you want to buy, choose the amount, and pay. You’ll be able to find all your operations on your dashboard.

Alternatively, you can choose to use one of the dedicated wallets offered by Freewallet or its multi-currency wallet.

Second Step: Don’t Sell It and Hodl

As we mentioned, hodling just consists in buying a cryptocurrency and keeping it. So, if you want to hold, you don’t need to choose the right moment to sell, and you won’t need to constantly analyze the market.

Freewallet only keeps your assets in cold storage, to guarantee security and allow you to safely hodl.

Is HODL a good strategy?

An investor like Warren Buffett says that this is the safest strategy.

When traders and investors find a reliable project with strong tokenomics, they rely on the fact that the crypto supported by that project will succeed and rise in value in the long run.

It’s the same principle applied to stocks to decide whether to keep them or not. When it comes to cryptos, we need to pay further attention, but also in this case it is useful to look at the characteristics of a specific crypto to make sure that its value will increase over time.

This happens especially when that crypto follows some economic principles:

A limited supply;
A precise roadmap;
A strong community;
When the limited supply can’t be applied, a mechanism to control supply is put in place – like, for instance, burning events or fee-burning.

To identify this kind of project, traders and investors use fundamental analysis as a sort of filter.

So, what does HODL mean in trading?

In reality, the right question is what does HODL mean in investing? Actually, hodling is more related to investments, if we consider that investing differs from trading exactly because investments involve long-term strategies, while trading can even involve those positions opened and closed during the same day.

When you decide to hodl, this means that you are ready to keep the same asset even for years.

For this reason, it’s not a strategy used by all traders: it has its pros and cons, and while it’s suitable for all those investors who want to spend less time and are willing to have less liquidity and higher profits, hodling is not the best choice for those who want to feel the adrenaline of trading and constantly rebalance their portfolios.

But hodling can also be considered as a middle ground: those traders who want to have medium-risk portfolios hodl major cryptos and trade different altcoins to diversify their portfolios.

Conclusions

Even if it started as a typo on a crypto forum, the world HODL manage to become popular and to include a broader meaning. In fact, it became the acronym for Hold On for Dear Life, to point out that the safest strategy to deal with the high volatility of the crypto strategy is holding.

But of course, it is not a strategy that works for everyone: some traders feel confident with volatility, prefer short-term trades, and some prefer to use this strategy just to balance their portfolios and make them less risky. In any case, it is important to find reliable projects and to do your own research before hodling.

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