What does HODL mean?

No, this is not a misspelling. Although, it originated from one. Hold is a term used in the context of Bitcoin (BTC) and other cryptocurrencies to indicate a buy and hold strategy. HODL has come to stand for ‘Hold On for Dear Life.’

On December 13th, 2013, in a drunk rant full of other misspellings, Game Kyuubi typed “I AM HODLING” in the bicointalk forum, and the misspelling became just another term in the crypto lexicon. Game Kyuubi likely made this announcement in response to the 39% crash in the value of bitcoin from $716 to $438 in a 24-hour period. Game Kyuubi was stating the intention to stop trying to time the market and actively trade Bitcoin and simply hold the investment.

While this might have been a drunken rant, buy and hold strategies represent a legitimate investment strategy, and not only in the world of cryptocurrencies. In any investment, long-term growth is the goal for many investors, and frequent buying and selling can be both expensive and disappointing. As Game Kyuubi learned the hard way, it is very difficult to predict and time the market.

And, for the record, with Bitcoin recently hitting new highs well over $50,000, acquiring it at $438, or even $716, seems like an excellent investment. If Game Kyuubi did, indeed, hold (or hodl) they would be sitting on an impressive gain.

Even seasoned and professional investors tend to do a poor job of market timing. Even when they are lucky enough to time the market successfully, they can rarely do it consistently. So, unless someone is investing specifically for the thrill of taking wild gambles and risking their investments, a buy and hold strategy simply makes more sense.

Buy and hold is a passive investment strategy in which one buys an investment with the intention of holding it for an extended period of time. The strategy is to hold through any investment turbulence, ride the ups and downs, and thereby avoid selling at a poor time. Fear of missing out (represented by another popular crypto term- FOMO) is a psychological need to make a move and invest before possibly missing out on a price jump (a ‘pump’). A hodl buy and hold strategy not only prevents selling at a bad time, but succumbing to these FOMO investments that often occur when the market is rising and represent a por time to buy.

In the stock market, one main investing strategy involves seeking out undervalued gems and holding the investment until it reaches a fair market value, profiting from this move in the value of the equity. It is little different in the cryptocurrency market with a hodl strategy. Seek out a coin that promises future value, purchase it, and then forget about it. Don’t trade it, don’t even obsessively watch the value of the coin, instead resolve to simply hold the investment until the value increases.

For bitcoin purists, those that believe bitcoin is the only true and valid cryptocurrency, a hodl strategy should come easily; there is no desire to trade between bitcoin and other cryptocurrencies. But this also means buying and not selling, no day trading.

In the crypto community there are many who believe that fiat currencies will eventually be replaced by a decentralized currency regime. For many cryptocurrency maximalists they believe bitcoin will be the future. A hodl strategy is a natural investment move if the expectation is that bitcoin will one day be the major medium of exchange.

Hodl is the cryptocurrency version of buy and hold, and presents many benefits over frequent trading. Hodl helps to prevent FOMO buying and panic selling. A hodl strategy will also smooth over turbulent times in the crypto market. But before attempting to hodl, DYOR (do your own research) and ensure that the coins you are considering hodl-ing should be invested into for the long term.