En the world of cryptocurrencies You can find two types of people: those who want to invest their funds in cryptocurrencies and keep them for a long period of time, known as HOLDERS. And those others who want to take advantage of the volatility and fluctuations of the system to generate profits by carrying out different operations, known as TRADERS. Well, in this chapter we will study the first group, known as HOLDERS.
The word HODL (from the English HOLD, but poorly written) is very frequent among users and investors of cryptocurrencies, mainly from Bitcoin. And it refers specifically to the firm decision to acquire an asset and keep it over time. In Bitcoin, this decision is seen as an investment philosophy, which allows users to exponentially multiply their assets in the near future.
The beginnings of the Hodling
By 2013, when Bitcoin was suffering big drops in its prices, the BitcoinTalk user, GameKyuubi, wrote a thread that started with the following expression: "I AM HODLING". In the thread, he made reference to the fact that he would keep his bitcoins and not sell them even if the price kept falling. In his message he explained to the community the reason for his decision, also acknowledging that he had made a writing error. Writing the word HODL instead of HOLD, which translated into Spanish, means to keep or keep.
Almost instantly, memes of all kinds began to appear, referring to the words of this user. Adopting the expression Hold on for dear life as a phrase typical of Bitcoin investors, who would keep possession of their currencies at all costs.
HODL as an investment strategy
Due to the volatility of cryptocurrencies, especially Bitcoin, the decision to hodl over currencies has proven to be a very profitable long-term investment strategy. Thus, many experts in the field agree that it is one of the best options.
The most interesting thing about hodling is that it is an applicable strategy for cryptocurrency investments, but it can also be implemented in any investment field or area, such as stocks, real estate, or others. Thus, in different financial markets you can see many investors who maintain ownership of their assets, even though there are fluctuations and falls in the markets.
It is a relatively simple strategy, buy and hold despite the ups and downs. It is done. However, it requires nerves of steel, especially in a market like that of cryptocurrencies, and very few people in the world manage to endure a tension and pressure of that magnitude on a daily basis, both when it rises and when it falls.
In the case of Bitcoin, its price fluctuated between $ 0.003 and $ 0.10 per unit during the first years. And it wasn't until 2012 when it began to take off in value, reaching approximately $ 13 per unit. Later, in 2013, the price of Bitcoin continued to rise, reaching over $ 1.000 per unit. At those moments, the holders of bitcoins (the hodlers) began to perceive the fruits of maintaining possession of these assets. Proving that simply staying away from cryptocurrencies for a while can be a highly beneficial action.
Hodling vs Trading
During 2017, many investors attributed their success and profits to the operations and movements they made in the crypto market. While others attributed it to cryptocurrency hodling. And is that for that year, Bitcoin experienced a simply incredible rise, reaching $ 20.000 USD per unit.
In this euphoria, fame was generated about two investment strategies, which for everyone, were infallible: hodling and trading. Hodling, as we have already mentioned, is the action of conserving cryptocurrencies for the long term. While trading is based on actively and constantly carrying out buying and selling operations in the market, with the aim of obtaining profits from said operations.
Although the purpose of both strategies is the same (to generate profit), each of them has its own implications. For example, hodling, being as basic as buying cryptocurrencies and saving them for a long period, any user can implement it. While trading, having to carry out operations much more frequently to buy low and sell high, implies having a knowledge of the market. In addition, to have strategies and a much greater capacity for analysis. Since in trading, a failed trade or misinterpreted signals can mean large losses.
However, users who perform hodling are also not passive or inactive. Before acquiring an asset for hodling, it is necessary to thoroughly investigate that asset. What is your project, objectives and goals; which is the work team that is behind the development of that project. What solution does it offer in the future, and many other factors, to determine if it is profitable or not to invest in it. However, compared to trading, hodling can be a much simpler and calmer strategy, as it does not take large amounts of time.
The first and largest Bitcoin hodlers
The first user to mistakenly use the word HODL was GameKyuubi, who was credited with incorporating this term into the crypto world. However, the creator of Bitcoin is considered, Satoshi Nakamoto, as one of the first and greatest Bitcoin hodlers. Since it is estimated that Nakamoto is the holder of more than 1 million bitcoins.
Next, the brothers Winklevoss They are also considered great Bitcoin hodlers. Due to their statements in 2013, where they claimed that they had around 1% of the bitcoins in circulation at the time, under their power. Likewise, the CEO of Digital Currency Group, Barry Silbert, is also considered as one of the biggest Bitcoin hodlers. Who claimed in 2018, that he had more than 400 million dollars in bitcoins.
On the other hand, we must not forget exchanges and Whales, who are the largest holders of bitcoins and cryptocurrencies in the world. Exchanges or exchange houses operate around 9 trillion dollars in bitcoins. A figure that represents more than 6% of the bitcoins currently in circulation, and which is constantly growing. Likewise, crypto whales, which are known for their ability to influence the market, also manage a large number of bitcoins.