Of all the definitions used in cryptocurrency trading, HODL is the one that is most associated with crypto enthusiasts. In fact, it’s one of the few that is exclusive to cryptocurrencies. It’s a meme-worthy saying that evolved from a typo and has stuck with cryptocurrencies ever since.
What is it though? Should you really HODL forever? Should you ever stop HODLing? In this article, we’ll cover all of that and more to help you to learn the ropes of HODL, and how you can possibly increase your bags while staying true to your coin fandom at the same time.
What does HODL mean
HODL is an acronym. It means to hold on for dear life. This term originates from a typo, made by crypto enthusiasts, in a Bitcointalk forum post, and it just kind of stuck. It refers to being able to hold through the ups and downs of the cryptocurrency market no matter how violently the price swings.
After slowly evolving from a typo to a meme, it’s now what everyone tells you when there’s any kind of talk of selling. Should you listen to this advice though? While some have made their fortunes HODLing, others have found out a little too late that sometimes that isn’t the best course of action.
Why HODL instead of hold
In addition to the story behind the HODL term, it’s also has a slightly different idea behind it. Many people who believe in the HODL mindset are ready to hold on for dear life.
Some of them might not ever want to sell, and they believe in buying more Bitcoin to replace any they have spent. For those looking to just hold for a short time this might seem extreme, but for those who are really dedicated to the idea of cryptocurrencies, the choice seems obvious.
Bitcoin or altcoins to HODL
It’s up to you what crypto asset you want to HODL. Many people choose to HODL Bitcoin because it was the original cryptocurrency and it has a staying power. However, there are many other solid options which you could choose to hold such as Ethereum or Monero which are also very useful and have a lot of use in the cryptocurrency space.
Which coins are fine to HODL
When choosing a coin to HODL, you should make sure to properly evaluate it first. A coin that makes a good HODL has an extraordinary use case and enough low supply that it will be able to appreciate in value over time. It’s also better to do this with more established currencies, because it’s hard to tell exactly what will happen to new assets.
HODLing requires you to be fully devoted and have a strong belief in the coin. While larger market cap coins could give you more stability, being able to HODL a lower market cap asset could produce higher profit.
Where to HODL coins
HODLing is for the long term, and that means you should take extra care with your storage options. If possible, you should look for a hardware or paper wallet that you can utilize to store your crypto coins. This is always safer than a hot wallet like you’d have on a desktop or mobile phone, and if you’re really in it for the long haul, then it’s a cold wallet is the way to go.
If you’re unfamiliar with these types of wallets, cold wallets are not connected to the internet. This makes it much more difficult for someone to try to steal your funds, and they are always the safest option when long-term HODLing.
When to stop HODL
Some people will never stop HODLing, but if you don’t then you’ll never really realize any profit. You should stop HODLing crypto when you feel it’s right to do so. Setting a profit goal is a good idea, and even if you truly believe in the future of the currency, it’s typically a good idea to cash out some of it to collect your gains.
This accomplishes two goals for you. First, it allows you to remove some capital in case the asset value plummets later. This is a pretty safe assumption, especially if your coin has experienced a huge pump in value. Second, if the value does go down, you now have free capital. It’s possible that you could buy twice as many coins as you held before.
Hold or day trade crypto
There are many opportunities for trading, and it’s possible that you could double or even triple the amount of coins you have if you’re willing to ride ups and downs.
However, cryptocurrency day trading is not for everyone, and seller’s regret is as real as buyer’s regret is. Before taking this approach you should have a solid plan in place and set goals for yourself to keep you from making mistakes based on emotions.
If you’re interested in trying to flip your stack to gain more coins, then a strategy that many follows is to sell half. This limits your “upside loss” if the price continues to rise, but it still gives you a nice amount to play with to try and increase your bags.
If you’ve been holding the coin or token that you want to flip for a while, then you may be already familiar with its trends of ups and downs. If not, study the chart to try to figure out the best time to buy and sell.
HODL vs SODL
SODL is pretty much the opposite of HODL. If the sentiment surrounding Bitcoin is very negative, then you may see people saying this instead. The decision of whether to HODL or SODL is a personal one. If you desperately need money, then it may be best not to risk it.
However, if you don’t need the funds now, then the reward for HODLing could be much greater. Just remember that it’s not all or nothing, and it’s possible to sell a portion, and then continue to HODL a decent amount of your coins as well.