What is HODL? 10 Crypto Slang Terms Explained

For cryptocurrency maximalists, HODL represents more than a strategy for reigning in FOMO (Fear of Missing Out), FUD (Fear, Uncertainty, and Doubt), and other profit-eroding emotions. Long-term crypto HODLers stay invested because they believe that cryptocurrencies will eventually replace government-issued fiat currencies as the basis of all economic structures. Should that occur, then the exchange rates between cryptocurrencies and fiat money would become irrelevant to crypto holders. FUD is another acronym that stands for ‘Fear, Uncertainty, and Doubt.’ Part of the reason why cryptocurrency markets are so volatile is that they are vulnerable to public perceptions. Whenever there is negative press coverage, the value of the entire market will fall and the reverse is true.

• It’s a healthy part of a sensible cryptocurrency investing strategy when combined with serious research into the quality and long-term prospects of your cryptocurrencies.
• After all, we know that cryptocurrency doesn’t have the same proven track record that the stock market has.
• The right time to sell will largely depend on the goals of investing.
• Learn where the term came from and why it’s a useful approach for amateur traders.
• It’s important to state that debating whether or not a HODL strategy is worth it when investing in cryptocurrency is entirely different from the question of whether to invest in cryptocurrency at all.

It’s been an interesting journey, one that’s taught me a lot about the value of patience in investing. As a firm believer in the HODL strategy, I apply it to my own investments. Because it’s a relatively new and rapidly growing market, prices are constantly shifting. To protect your investments, it’s essential to know the ins and outs of your strategy of choice before making a purchase. Overall, HODL best suits investors with a multi-year vision for their preferred crypto projects.

Frequently Asked Questions

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• The term is, however, used to describe huge losses, and even though ‘huge’ is considered a relative term, losing a lot of coins qualifies as being rekt.
• We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site.
• This influences which products we write about and where and how the product appears on a page.
• The cryptocurrency world is full of exciting and interesting eccentricities, including the lingo.

In crypto, the term is used to refer to individuals or institutions with an outsized investment in a particular asset. Mooning is a related term to ‘When Lambo’ that also refers to stratospheric price rallies. If the price of an asset rises very fast, the community equates that rise to a ride on a rocket to the moon which gave rise to the phrase going to the moon or ‘mooning,’ for short. Trying to beat the market by timing reversals is an expert’s game, and most newcomers to crypto are not experienced at doing that. HODLing thus becomes a safe play for such individuals and institutions looking for long-term gains rather than gaming the system. In the case of Bitcoin, if you’d purchased and HODLed your coins from the start, your profits would be unprecedented.

What does HODL mean in crypto?

Depending on your investment strategy and risk profile, HODLing can be a good approach. However, crypto markets are highly unstable and there is no guarantee that HODLing will be successful. Even if HODLing doesn’t seem right to you, there’s still lessons to be learned from this approach. HODLers are a social bunch—their strategy relies on support from other investors, who urge them along and convince them not to sell if they are feeling unsure.

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• To make sense of such crypto-slang, CNBC Make It asked Peter Saddington, a serial entrepreneur and early bitcoin investor who runs a bitcoin community called The Bitcoin Pub, to break it down.
• Buy-and-hold investing occurs when individuals purchase an asset—often stock—and hold it for a period of many years.
• As a result, hodlers are theoretically safe from some trading tendencies, be it buying at a high price or selling at a low price (the latter is also known as “SODL” – a less commonly used term derived from “HODL”).
• HODLing is based on the idea that, historically speaking, the market will ultimately trend upward.
• HODLing requires a long time horizon, so it’s usually best for investors that don’t need access to their cash for a long time.
• NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

Under the post-COVID low-interest context with inflation expectation, investors also hold cryptocurrencies for value reserve. The term ‘HODL’ originated from a post in a Bitcoin forum, where the user accidentally typed ‘hodl’ instead of ‘hold’ during a discussion about trading strategies. The user referred to themselves as an ‘illusioned noob’ who was poor at trading, thus choosing to ‘hodl’ during a period of high price volatility. Yes, the principle of HODLing can also be applied to the stock market. It’s similar to the buy-and-hold strategies used by many stock market investors. The idea is to purchase stocks and hold onto them for a long period, regardless of market fluctuations.

Why Should I HODL?

It is important to know when the right time is because this metric varies from one individual to another. The right time to sell will largely depend on the goals of investing. If these goals are achieved, the coin holder can sell at any price in the market; otherwise, they continue to HODL. HODLing campaigns are also witnessed whenever the price of an asset starts falling. In such a situation, any more selling could lead to further price correction and the best action for the long-term investors is to discourage weak hands from letting go and thereby mitigating further losses.

• Still, if Bitcoin bulls are correct and BTC eventually becomes the world’s universal digital currency and preferred long-term store of value, long-term HODL’ers will benefit.
• FUD is another acronym that stands for ‘Fear, Uncertainty, and Doubt.’ Part of the reason why cryptocurrency markets are so volatile is that they are vulnerable to public perceptions.
• To do it right, you shouldn’t take profits when your crypto is skyrocketing, and you shouldn’t back out when prices are going down.
• One in which long-term profits are sought, trying to get the maximum benefit from the cryptocurrencies they have.
• However, if an analyst could zoom into the monthly price action of most of these assets it would be evident that most experienced wild rides in short-term durations.

There’s little sense in earning a 10% annual percentage yield if a coin’s price plummets by 25%. Dozens of high-profile blockchains now use a Proof-of-Stake (PoS) consensus mechanism to validate transactions. On these chains, anyone can lock (“stake”) their coins Hexn to earn a percentage-rate reward over time for their help securing the network. Staking on blockchains like Ethereum, Solana, or Polygon earns passive income with minimal effort. What started as a typo in an online forum has developed a real meaning of its own.

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Why do people in crypto love to HODL their coins?

However, the difference between long-term value investing and long-term HODLing is the difficulty in accurately valuing cryptocurrencies. Ben Gagnon, chief mining officer for Bitfarms (BITF), says HODL is more of a mentality than an investing strategy. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.

HODL

However, while “HODLing” might be a good strategy, it doesn’t tell you what to own. Buying and holding a poor investment can lead to years of bad returns, if not a total loss on the investment. The term almost immediately became a meme via social media, and the misspelling continues to live on in internet message forums such as the infamous Wall Street Bets board on Reddit. Here’s the origin of HODL and why it can be a valuable investing strategy. Bankrate.com is an independent, advertising-supported publisher and comparison service.

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Because HODLing requires a long-term commitment, many investors use cold storage devices, such as hardware wallets, for security. Cold wallets keep a user’s private keys offline so their assets are not easily hacked or stolen. Even high-quality hot wallets are generally more vulnerable to hacks than cold wallets.

What is the difference between HODL and a buy-and-hold strategy?

It’s also commonly come to stand for “hold on for dear life” among crypto investors. In early bitcoin forums, someone posted a message that spelled the word “hold” wrong, and readers interpreted it as an acronym “hold on for dear life,” Saddington explains. “Now, it’s become a meme of sorts, so that when the prices are highly volatile, bitcoin buyers say ‘HODL!'” Saddington describes himself as “a long-term HODLER.” In that case, investors buy when prices are low, hold an asset while the value increases, then try to sell it before the price dips.

That means that you’re missing an opportunity for potential gains in those markets. Jason Porter, senior investment manager at Scottish Heritage SG, says the HODL strategy can be particularly useful for crypto investors during market weakness, such as 2022’s crypto winter. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

HODL: A typo that became a crypto investing strategy

An affiliate of Public may be “testing the waters” and considering making an offering of securities under Tier 2 of Regulation A. No money or other consideration is being solicited and, if sent in response, will not be accepted. No offer to buy securities can be accepted, and no part of the purchase price can be received, until an offering statement filed with the SEC has been qualified by the SEC. An indication of interest to purchase securities involves no obligation or commitment of any kind. Although the term “HODL” originated in the crypto community, stock market investors have been HODLing for a long time. You can HODL any stock you own, but it’s usually best to avoid HODLing risky stocks. There are a host of stock market myths out there and just like any other investment including crypto, the stock market also goes through bull and bear periods.

The History of the Term ‘HODL’

While there is incredible volatility in crypto, investors have earned the best returns of any asset class in the world simply by hodling their coins, as you can see in these bitcoin success stories. Since the original HODL forum was posted in December 2013, Bitcoin prices are up about 2,500%. Even investors who bought on the first day of 2018 and employed a HODL strategy are still up more than 17% on their investment. Cryptocurrency and blockchain technology are still relatively untested, and they may not pan out as the revolutionary innovation their supporters envision. There are also times when it may be prudent to sell, such as cashing out some gains when you’ve met your goals.

HODL or Day Trade

As with many other popular memes, the origin of HODL can reportedly be traced back to a typo. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.