What Exactly Is The Definition Of ‘Hodl’?
Crypto investors instantly renamed HODL “hold on for dear life” to urge others not to sell when prices plummet. The meme also admits that rookie crypto investors cannot earn from short-term investments in the unpredictable crypto market.
Long-term investors in Bitcoin, Ethereum (ETH), and other top cryptocurrencies have benefited from the HODL technique, which has helped them weather market swings.
The HODL community advises investors not to sell crypto when prices climb or give up when prices fall.
HODL Bitcoin
Bitcoin investors who have held onto their crypto assets have benefited from the HODL method.
Since the HODL forum began in December 2013, Bitcoin prices have risen 2,500%. Even HODL investors who purchased on January 1, 2018, are up over 17%.
Bitcoin profits need years of “HODLing” through stomach-turning losses.
Bitcoin has had many terrible yearly returns due to its tremendous volatility.
Fearful investors who sold BTC during earlier downturns have regretted it.
Cryptocurrency investors are hardly the first to ignore short-term market swings and concentrate on the long term. Warren Buffett and other value investors disregard short-term market volatility and concentrate on the long term.
Long-term value investment is different from HODLing since cryptocurrencies are hard to evaluate. worth investors measure a stock’s intrinsic worth using price-to-book, price-to-earnings, and price-to-sales ratios.
Bitcoin has no cash flow, income, or profits, and it’s not backed by assets with inherent value, making its long-term worth hard to forecast.
Good Investment Strategy?
HODL may not work for many crypto investors or currencies. Even professionals have trouble timing short-term transactions. Psychological biases harm investors’ decisions.
The investor sentiment cycle depicts a typical investor’s feelings depending on portfolio performance.
When a stock or crypto’s price is lowest, investors often feel fear, fury, and panic and sell at the worst moment. Investors typically purchase at the worst moment when a stock or coin price is high due to excitement and overconfidence.