HODL: cryptocurrencies are undoubtedly the hottest asset. In recent years, the digitization of the economy, further driven by the COVID health crisis, has given a solid boost to these crypto assets, which are constantly breaking records in their prices. One of the strategies that investors use is Hodl, and this article will explain what it is and how it is done.
In cryptocurrencies, investors use various strategies to make a profit. A prevalent one that does not offer a high risk is HODL, a term that came from a misspelling (hold) and has been coined to become the protagonist of numerous memes.
Table of Contents
Word Origin HODL
The word HODL, which designates a cryptocurrency investment strategy, dates back to 2013, specifically in December, when bitcoin was experiencing a sharp decline. A user of the Bitcointalk forum, published “I AM HOLDING” with that misspelling. In reality, he meant I am holding, that is, that he held on and did not sell, although the price was collapsing.
Since then, “holding” has become as good an investment strategy as any other. Those who practice this betting on digital currencies are unaware of the ups and downs of a risky asset, such as cryptocurrencies. Instead, they hold their support regardless of price fluctuations to obtain a long-term return, either when their markets price stabilizes or reaches a specific figure.
It would be the opposite of what traders do, who continuously move their assets looking for the most short-term profitability. This strategy requires handling specific knowledge of the stock market to know when to sell (expensive) and buy again (cheap).
HODL With A Crypto Strategy With Hodlers
For those who do not understand much about stock prices, assets, and the functioning of the markets… the HOLD is an excellent opportunity to benefit from the growth of cryptocurrencies in the long term. In addition, there are specialized pages where you can get a lot of valuable information, such as hodlers.es.
This website makes many valuable resources available to its users, such as graphs, calculators, converters, and videos. With the information offered on this site, you can learn everything or almost everything about the bitcoin ecosystem. In addition, it provides those who want to start investing in cryptocurrencies an alternative to having a well-made portfolio without worrying about anything.
Hodlers HODL The Top 10 Cryptocurrencies By Market Cap
The holders’ strategy is based on an investment portfolio of 10 cryptocurrencies. It is, therefore, a well-studied number, not at all random, the minimum necessary to be statistically significant. There would be a risk of reducing the return by a smaller amount due to insufficient diversification.
Structure Of Hodlers
The structure of the HODLers Crypto Strategy is made by weighting each cryptocurrency by the square root of its market capitalization.
In this way, taking too high a bet towards a single asset is avoided, thus taking advantage of the possible revaluations of cryptocurrencies with lower capitalization.
Hodler Performance
The balance of the investments is carrie out monthly to avoid deviating from the objective. Every four weeks exactly, the structure of the HODLers Crypto Strategy will be modifie to follow the market and maintain the cryptocurrencies with the highest capitalization.
Is It Convenient To Do HODL?
Yes, it is a much safer strategy than other investment tactics. Not a few experts assure that it is one of the best options. Due to the volatility that the cryptocurrency market suffers. Especially Bitcoin, making hodls is very profitable in the long term , practically with total security.
Many investors keep their assets in properties, despite fluctuations. Constant falls in the markets. In this article. The holding strategy has been applies to cryptocurrencies. But it applies to any other type of investment, such as stocks, real estate…
Undoubtedly, the main advantage is that anyone can do it. It does not require excellent knowledge. And it is a relatively simple strategy: buy and stay despite the ups and downs. However, it does require a certain amount of calm in order not to rush. As not everyone can withstand the tension and pressure of the ups and downs without making any movement.
Analyzing the specific case of Bitcoin, the most popular cryptocurrency. Its price in the early years was between $0.003 and $0.10 per unit. In 2012 its value began to grow, reaching $13 per unit. However, throughout 2013, despite the ups and downs, the price of Bitcoin continued to rise and exceeded $1,000 per unit. Those holders who didn’t sell in 2012 could never be happier that they kept their assets.