With the advent of cryptocurrency, new terms such as FOMO, WAGMI, and HODL have been steadily joining the lexicon. Most crypto experts should be familiar with the term 'HODL.' But as a beginner, you might have seen the term and wondered, 'what is hodling in cryptocurrency?' Hodling, in cryptocurrency, comes from there four words HODL, short for "Hold On for Dear Life." HODL is a funny misspelling of the English word "hold." It describes the strategy of buying and holding cryptocurrency, during volatile periods, as a strategy to make the most of it.
As a beginner trader, you’ll often encounter the term HODL in lessons, forums, and crypto articles. HODL and words like FUD, Sats, Moons, etc., are part of crypto terminology or jargon. These terms have now developed from misspellings and slang into widely accepted terminology in the crypto market. In this article, you'll learn what is hodling and how it works.
What is hodling in crypto? What does hodl stand for, and how does the phrase “hold on for dear life” play into the deeper HODL meaning?
The best way to understand the term hodl is to understand the context of a basic investment principle; buy low, sell high, or buy and hold until the price increases. Many investors trade financial markets such as stocks, cryptocurrencies, and forex by buying and selling assets regularly. Some traders buy stocks or options and keep (holding, hodling) them until their value increases. This is a long-term strategy that traders typically use, regardless of price volatility.
So, if you decide to buy and “hodl” a stock asset, in that case, you're essentially holding a long-term position on the stock, intending to wait out market volatility and possibly make profits when the value of the stock increases.
However, cryptocurrency may have two different answers to the hodl meaning.
The first answer could be the buy-and-hold strategy of buying Bitcoin or other valuable cryptocurrencies to wade market turbulence while expecting profits. Here, the idea is to HODL (Hold On for Dear Life) rather than selling the cryptocurrency early and making a loss or small profits. This is fitting to what is hodling bitcoin.
The second answer refers to the HODL coin, a cryptocurrency built on the Binance Smart Chain (BSC). HODL is a community-owned token.
Now you know the meaning of the word, learn about its origin.
The History of Hodling
Suppose you search online for the hodl crypto meaning. In that case, you’ll probably see a link to an old website called Bitcointalk, an online cryptocurrency forum created by Satoshi Nakamoto, the famous yet unknown creator of Bitcoin. Nakamoto created Bitcointalk as a forum for discussing Bitcoin and interacting with users. Over the years, Bitcointalk has developed into an online community where Bitcoin and crypto enthusiasts, users, traders, and investors interact.
The term “HODL” originated from a Bitcointalk post by GameKyuubi. On December 18, 2013, GameKyuubi posted a rant about his admitted “bad trading” style and announced that he would hold on to his Bitcoin and stop predicting its price action. It was a normal post, except that GameKyuubi misspelled hold as hodl. He refused to edit/correct it.
Many years later, hodl meaning in crypto can trace its origin to that post, as the crypto community adopted it as a lingo. Today, traders use the popular Dollar Cost Averaging (DCA) strategy to mitigate bitcoin’s volatility.
Hodl and Cryptocurrencies
The meaning of hodl goes beyond just buying low and selling high, but involves knowing when to buy and when to sell. As mentioned above, hodl may refer to a specific buy-low-sell-high strategy or the HODL token itself.
The hodl strategy is premised on the theory that short-term market volatility should not be the basis for trading assets. That is, traders should look at the long-term price action of assets while trading, as they can reach and surpass previous high price levels. So, traders hodl Bitcoin and other cryptocurrencies as their prices dip and wait patiently or rebound.
This was the case in June 2021 when the great crash, led by Bitcoin, Ethereum, and Dogecoin, wiped off billions of USD in crypto. Many traders panicked and sold off to mitigate their losses, but many others used the hodl strategy to keep their crypto assets. While the former experienced substantial losses, the latter may have been vindicated as Bitcoin and other major cryptocurrencies recovered their prices and even reached new highs.
What is hodling crypto? Crypto traders have perhaps learned the hodl meaning of stocks and adapted the strategy to the crypto market to position for potential profits.
The HODL Strategy
To know the hodl bitcoin meaning as a strategy, it is necessary to know that the goal of hodling is to prevent or manage panic selling, responsible buying, and potentially make profits. This is why HODLing means more to traders and can practically determine their trading performance. Beginner and amateur investors often panic selling, especially during prolonged bearish markets when prices keep dipping. With hodling, they can manage their emotions and keep their crypto assets secure for any bull run.
The HODLing strategy is similar to the positional trading strategy in forex. At the same time, those who don't HODL are similar to forex day traders who take advantage of short-term market volatility to buy and sell for profits.
Is there a risk with HODLing? Well, there’s always market volatility, but it is unlikely that a bearish market will result in the total collapse of the crypto market. Crypto prices are more likely to recover after downturns. This is the crypto hodl meaning for long-term traders who want to make profits.
HODLing Coins and Crypto Wallets
Now you know what hodl meaning bitcoin means. If you want to hold Bitcoin or other cryptocurrencies, you must keep your assets safe and secure in a wallet. A crypto wallet is an application software for storing digital assets. You’ll have the private keys and passwords to the wallet, so only you have access. Digital wallets store your assets on blockchains so you can send or receive them anytime. A digital wallet is a key difference between hodl stock meaning and hodling crypto.
HODL is not the only term that applies to using your crypto assets; there are also BUIDL and SPEDN. These are misspelled words for BUILD and SPEND. If you prefer not to HODL, you can BUIDL or SPEDN your assets as you please.
BUIDL refers to using cryptocurrencies and digital assets to expand the young cryptocurrency industry by building, deploying, scaling, and managing blockchain-based apps, platforms, projects, and tools that integrate cryptocurrencies as native assets. BUIDLers are crypto owners that use their assets for the stated purpose. They sometimes consider HODLers as being opposed to them.
SPEDN is the use of cryptocurrencies in payment and other financial transactions. This is based on the belief that as more people use cryptocurrencies, the adoption will grow until it reaches global proportions and cause governments to adopt them. SPEDN, as opposed to what is hodling in cryptocurrency, advocates more spending on cryptocurrencies to increase the assets in circulation.
Whether or not you use bitcoin hodl meaning as an investment strategy, you can HODL, BUIDL, and SPEDN your cryptocurrency assets as you see fit.
The Bottom Line
What is HODLing? HODL is an acronym for "Hold On for Dear Life." It is used in the crypto ecosystem to refer to a strategy of holding onto bitcoin holdings through its various price fluctuations and volatility.
The acronym is a misspelling of the word "holding" by a user on an online forum. Typically used by Bitcoin maximalists, a HODLing strategy is similar to the conventional buy-and-hold investing strategy. What is hodling crypto? HODL may also refer to the HODL token on cryptocurrency exchange Binance's Smart Chain. You can also earn rewards in Binance Coin by depositing your tokens in a liquidity pool or through bitcoin mining server hosting.