Definition and Examples of HODL
HODL is a misspelling of the word “hold” and is a popular term used in the world of cryptocurrencies and Bitcoin to describe a specific investment strategy. The strategy involves purchasing assets and holding them for long periods. It is one of many colloquial terms used by cryptocurrency traders.
How Does HODL Work?
HODL is an investment strategy in which individuals buy cryptocurrencies and hold them for a long time. This allows investors to benefit from the increasing value of the assets. A person who adopts the HODL strategy does not try to time the market and will not sell their investments when they believe the market may decline.
HODL vs. Buy and Hold
The strategy of buying and holding assets for a long time is not new at all, and its roots predate the invention of cryptocurrencies. Buy and hold occurs when individuals purchase assets – often stocks – and keep them for an extended period. Instead of trying to time the market, this strategy simply assumes that the asset’s price will increase over time.
Advantages and Disadvantages of HODL
Advantages:
- Does not rely on market timing
- Gains are subject to long-term capital gains tax
- Has a track record of success
Disadvantages:
- Crytocurrencies do not have a successful track record
- Capital is tied up for long periods
Is HODL Worth it for Individual Investors?
After hearing some arguments for and against the HODL strategy in cryptocurrency trading, you might wonder if it is really worth it. After all, we know cryptocurrencies do not have the same successful track record as the stock market.
To answer this question, let’s go back to the example of the Bitcoin crash in 2013. At its lowest point during those few days, the price of Bitcoin reached $506.17. Let’s look at what would happen if you invested in Bitcoin in December 2013 and held onto it.
On Friday, May 21, 2021, the price of Bitcoin was trading at $35,889.63. If you had purchased 10 Bitcoins at its low price in December 2013, your investment on May 21, 2021, would be worth $358,896.30, an increase of over $350,000.
It is important to mention that discussing whether the HODL strategy is worth investing in cryptocurrency is entirely different from the question of whether to invest in cryptocurrencies in general. Cryptocurrencies are still relatively new and are not subject to the same regulations as traditional investments. Investors may face additional risks. As with any investment, you should ensure that you understand cryptocurrencies before starting to invest.
Source: https://www.thebalancemoney.com/what-is-hodl-5187966
.lwrp .lwrp-list-double{
width: 48%;
}
.lwrp .lwrp-list-triple{
width: 32%;
}
.lwrp .lwrp-list-row-container{
display: flex;
justify-content: space-between;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: calc(12% – 20px);
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item img{
max-width: 100%;
height: auto;
object-fit: cover;
aspect-ratio: 1 / 1;
}
.lwrp .lwrp-list-item.lwrp-empty-list-item{
background: initial !important;
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
}@media screen and (max-width: 480px) {
.lwrp.link-whisper-related-posts{
}
.lwrp .lwrp-title{
}.lwrp .lwrp-description{
}
}
.lwrp .lwrp-list-multi-container{
flex-direction: column;
}
.lwrp .lwrp-list-multi-container ul.lwrp-list{
margin-top: 0px;
margin-bottom: 0px;
padding-top: 0px;
padding-bottom: 0px;
}
.lwrp .lwrp-list-double,
.lwrp .lwrp-list-triple{
width: 100%;
}
.lwrp .lwrp-list-row-container{
justify-content: initial;
flex-direction: column;
}
.lwrp .lwrp-list-row-container .lwrp-list-item{
width: 100%;
}
.lwrp .lwrp-list-item:not(.lwrp-no-posts-message-item){
}
.lwrp .lwrp-list-item .lwrp-list-link .lwrp-list-link-title-text,
.lwrp .lwrp-list-item .lwrp-list-no-posts-message{
};
}
Leave a Reply