The main concern that every crypto investor and trader has is whether to hold on to a crypto asset or sell it. Unfortunately, this has become a puzzle due to the volatility of the crypto space. Although both hodling and trading are regarded as a strategy for building a balanced portfolio, there are some concerns surrounding the process.
What is HODLing?
HODL is a purposely misspelled word for "Hold" in the crypto space. It refers to a specific investment strategy that involves buying and holding on to a crypto asset over a particular period. Therefore, Hodling is the practice of buying cryptocurrency, holding it, and refusing to sell it to shield oneself from price fluctuations.
HODL has become a frequently used term in the crypto space, and it has also been given the acronym "hold on for dear life." Apparently, HODL appeared first as a misspelled in a forum back in 2013 as the author made a post saying that he would hold his investments rather than day trade because he was unable to accurately predict market trends. Other forum participants immediately adopted the term, which became a standard investment strategy in the crypto ecosystem.
HODLing is commonly used among investors who are peculiarly called HODLers, who are notably known not to be good with trading and freely admit they lack the expertise to engage in short-term trades like scalping, day trading, or swing trading but still want the exposure of the market volatility. HODLers are also described as investors who are adamant about a particular crypto project and want to keep their investment for a long time.
How Does HODLing Work?
HODLing is a low-risk investment strategy in which people buy cryptocurrencies and keep them for a very long time. As a result, HODLers can benefit from an increase in the asset's value while keeping faith in the asset.
HODLing essentially goes against day traders' "time the market" idea, where they buy and sell on a short-term basis to maximize their short-term cryptocurrency profits. Hence, regardless of the shooting price of the asset, HODLers don't take profits and don't back out when there's a decline in asset price.
HODLers are unaffected or uninfluenced by important media news and updates, market sentiments, or any circulating information that could devalue their assets. However, they choose to buy more at each new low price point instead of panicking and selling their assets in response to market sentiment.
Benefits of HODLing
- Hodling eliminates the stress of monitoring the cryptocurrency charts and timing the market for a profitable entry.
- It enables investors, particularly crypto newbies, to participate in the market without putting in much effort.
- By Hodling cryptocurrency for the long term, hodlers do not have to worry about transaction and network fees when trading a crypto asset.
- Hodling is a great way to practice dollar-cost averaging because it allows investors to periodically add assets to their portfolios.
- Investors are free from worrying about technical analysis and other complicated crypto terms when hodling.
- Hodlers can earn money while gaining knowledge about cryptocurrencies.
Drawbacks of HODLing
- The most significant drawback of this investment strategy is the duration it takes to achieve the desired profit.
- Due to the waiting length, hodlers risk losing their assets if they can't access their wallet or misplace their seed phrase.
- Hodling strategy limits investors from taking advantage of quick gains due to price fluctuation.
- Capital is always tied for the duration of hodling.
Is HODLing your Assets the Best Strategy?
The hodling investment approach enables investors to avoid the crypto market's high volatility and avoid emulating market sentiment. Therefore, it helps investors avoid a common error in the cryptocurrency space where investors buy high due to "fear of missing out" (FOMO) and sell low due to "fear, uncertainty, and doubts" (FUD).
Hodling can be used with dollar-cost averaging to take advantage of the price fluctuation of the volatile crypto market. Hence, it is an ideal investment strategy for an investor thinking long-term. Also, it is a good starting point for a newbie yet to grasp cryptocurrency and blockchain technology.
HODLing with Cwallet
HODLing is an investment strategy for an asset that may generate returns for many years. Therefore, buying and holding your assets with the best wallet is ideal. With Cwallet, you can manage all your HODLings and maintain long-term focus without fearing losing your asset, allowing you the freedom to make more profitable investment decisions.
Cwallet is an interactive crypto wallet that can be used with your social media platforms. It has numerous features, such as storing your coins, swapping, tipping, airdrops, and earning money on the go while also supporting the crypto-economy via social networking.
What makes the Cwallet so unique is that it charges zero transaction fees, allowing you to maximize your profits.
- No Internal swap fees
- No Internal/ External withdrawal fees
- No Fees on Deposit
- Lowest Network fees, and lowest gas limit, enabling you to pay the cheapest network fees.
- No Extra Charges or Fees!
Cwallet does not charge any deposits, withdrawals, and token swap fees. Therefore, using the Cwallet is absolutely FREE!
So, what are you waiting for?
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