"Holding" consists of holding cryptocurrencies, which is known in the crypto world as HODL, a term widely used in the crypto world to describe the act of buying and collect coins so as not to spend them. Its main purpose is to wait for them to increase in value, and to observe how the initial investment appreciates.
What is Holdear in cryptocurrencies?
In the world of cryptocurrencies, You can find two types of people: those who want to take advantage of market volatility and fluctuations to generate profits through various operations, known as TRADERS. And on the other hand, there are those people who seek to invest their funds in cryptocurrencies and keep them for a long period of time, known as HODLERS.
The word HODL (a misspelled derivation of the English term HOLD, "to wait") 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 maintain it over time. In Bitcoin, this decision is seen as an investment philosophy, which allows users to exponentially multiply their assets in the future.
The beginnings of the Hodling
By 2013, when Bitcoin was suffering big drops in its prices, the BitcoinTalk user, Game Kyuubi, 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 that made reference 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.
What is this strategy?
Due to the volatility of cryptocurrencies, especially Bitcoin, the decision to hodl the coins has proven to be a very profitable investment strategy in the long term. Thus, many experts on the subject 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's a relatively simple strategy. buy and hold despite ups and downs. That's it. However, it requires nerves of steel, especially in a market like the cryptocurrency market, and very few people in the world manage to withstand tension and pressure of this magnitude on a day-to-day basis, both when it goes up and down.
In the case of Bitcoin, its price oscillated between $0.003 and $0.10 per unit during the first years. And it wasn't until 2012 that its value began to take off, reaching approximately $13 per unit. Later, in 2013, the price of Bitcoin continued to rise, reaching over $1.000 per unit. In 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 very profitable action.
Hodling or 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: the hodling and trading.
Hodling, as we have already mentioned, is the action of holding cryptocurrencies for the long term. While trading is based on actively and constantly carrying out purchase - sale operations in the market, with the aim of obtaining profits from said operations.
Although the purpose of both strategies is the same (to generate profits), each of them has its own implications. Hodling is as basic as buying cryptocurrencies and storing them for a long period, any user can implement it. Trading implies having knowledge about the market, having to carry out operations much more frequently to buy low and sell high. In addition, to have their own strategies and a much greater capacity for analysis. Since in trading, a failed operation or signals misinterpreted, can mean big losses.
However, users who perform hodling are not passive or inactive either. Before acquiring an asset for hodling, it is necessary to thoroughly investigate that asset. What is your project, objectives and goals; what 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, since it does not demand large amounts of time.
The first and largest Bitcoin hodlers
The first user to mistakenly use the word HODL was Game Kyuubi, 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. The exchanges or exchange houses around 9 trillion dollars are traded in bitcoins. A number that represents more than 6% of bitcoins currently in circulation, and that is constantly growing. Likewise, crypto whales, which are known for their ability to influence the market, also handle a large number of bitcoins.
Is Holdear profitable?
Although the value of Bitcoin, from its launch to the present, has undergone great and significant changes, many experts still consider the hodling strategy as profitable. However, today a much more in-depth study is needed on the crypto asset to be hodlear. Due to the volatility of the market and the demand for more investment to acquire cryptocurrencies than at the beginning.
With the arrival of new cryptocurrencies on the market, many users expect a process similar to what happened with Bitcoin to occur. It started practically without any value and today it is listed for Thousands of dollars.
However, as we already mentioned, an in-depth market study of a particular asset is necessary in order to estimate its profitability over time. It is something that cannot be taken lightly, since hodling means keeping said asset for several years to see results.
So it is important to be sure of the survival of the cryptocurrency over time. And if a user risks acquiring any cryptocurrency or token without being clear about the project's objective and its durability, they would not be making an investment, but rather a bet. Which could be the winner or not.
Likewise, with respect to Bitcoin, others maintain hope and firm belief in the value of Bitcoin, estimating that when the next comes halving, its price will go up exponentially. Since the amount of bitcoins that are put into circulation every day will be reduced by half, making this asset scarcer. What will revalue the cryptocurrency.