HODL: Its Origin and Advantages

HODL: Its Origin and Advantages

 HODL: Its Origin and Advantages

HODL is often known as an act of holding or holding an asset for a certain period after buying it. The difference between HODL and other asset containment measures is that HODL has a longer asset retention period. This term became known by accident in 2013.

HODL in Cryptocurrency

In the crypto world, HODL stands for hold on for dear life and actually comes from the word hold. The HODL strategy itself is often used in the world of Cryptocurrency because it is considered effective in preventing traders from losses due to short-term volatility. The use of the HODL strategy is also expected to provide long-term benefits.

The term HODL is also used in the Bitcoin world by traders. Which in Bitcoin HODL is used as a reminder for traders not to sell their assets shortly after buying them. This is following the function of HODL as a strategy to buy assets and then hold those assets.

There are two strategies in cryptocurrency that you can use, namely cut loss and holding assets. Some traders prefer a cut loss strategy or sell assets to save their capital because they feel that the asset will continue to experience price declines in the future. But not a few traders prefer to hold assets or HODL even though asset prices are falling at that time.

Usually, traders use this HODL strategy because they believe that in the future the assets they own can increase their price again. This is following the notion of HODL in Cryptocurrencies because it does not rush to sell assets when the price is down.

Origin of the term HODL

The origin of the term HODL first appeared accidentally in 2013 because of a forum user called Game Kyuubi. He mistyped his disappointment at the decline in the price of Bitcoin and became the sentence “ I'M HODlING”. From this Kyuubi Game tweet, many Bitcoin traders are familiar with the term HODL and use it to this day.

So initially the price of Bitcoin had soared from 15 dollars to 1,100 US dollars from January to early December. But entering the middle of December, the price of Bitcoin actually dropped drastically to 716 dollars. This incident reaped a lot of disappointment from Bitcoin asset owners, and not a few traders who sold their Bitcoin at that time.

However, it's different with Game Kyuubi, who still holds his Bitcoin assets even though he's disappointed. As a result, many people also follow the Kyuubi Game strategy and believe the price of Bitcoin will rise again later. This proved to be true, which is 2017 the price of Bitcoin reached 19,167 and continued to rise until 2021 when Bitcoin reached the price of 58,000.

Advantages and Disadvantages of HODL

If you believe that your crypto asset will continue to increase in price in the future, then you can use the HODL strategy and ignore short-term price volatility.

Therefore, it is important for you to first determine your investment goals and also learn about the fundamental aspects of the crypto assets that you own. This is necessary to determine the investment strategy that you will do.

As described above, the price of bitcoin jumped from US$15 to US$1,100 in 2013. While its value continues to rise, the crypto-asset has high short-term volatility, which means the price can go up and down very quickly.

Keep in mind that the HODL strategy cannot provide 100% profit in the future. Therefore some investors choose to take profits when the chart shows a downward trend in prices and does not hold on to assets before prices continue to decline. Keep weighing the advantages and disadvantages of using HODL well before trying this strategy.

HODL Philosophy

Two circumstances usually make traders too willing to take risks or too afraid to accept risks. The two conditions are FOMO (Fear of Missing Out) and FUD (Fear, Uncertainty, and Doubt). FOMO is a condition of traders who are too brave to buy assets even though the price is too high.

While FUD is a condition where traders are too afraid and become very doubtful about the development of their asset prices so they choose to sell assets at low prices. Both of these conditions can be overcome with the HODL strategy. Following the HODL strategy and philosophy, which holds assets when prices are down and sells them when prices are high.

The HODL philosophy expressed by Game Kyuubi is to stay positive in any situation when trading. That way you will be more focused to avoid short-term trading risks. Given the price of Crypto which changes quite often so you have to have your own strategy.

Safe and Convenient Cryptocurrency Trading With The Door

You can try the HODL strategy while trading at the Door. Why the door? This is because the Pintu application is not only officially registered with BAPPEBTI, but you can also start trading with minimal capital.

Even with only Rp. 11,000 you can already buy Crypto at the Door. This application is also suitable for novice traders who are still afraid to use too large a capital. Good luck!

Reference:

Jake Frankenfield, HODL Definition . Accessed date: 07-12-2021

Corporate Finance Institute, What is “HODL?”. Accessed date: 07-12-2021

Rhys Thomas, What does HODL mean in crypto? . Accessed date: 07-12-2021