What Does HODL Mean?

HODL – the spelling error heard round the crypto world has meaning for you.

Can you remember the first time you heard the term HODL? Whether you picked it up on Telegram or Twitter, few terms are more closely associated with the crypto community than this famous misspelling. But what does HODL mean, and where does it come from?

We answer all this and more in this article, including why you may want to evaluate what it’s come to represent as an approach to crypto investing.

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What Does HODL Mean?

Today, HODL has two popular definitions:

  • A misspelling of the word “hold,” used in reference to holding cryptocurrencies.
  • An acronym for “hold on for dear life,” also used in reference to holding cryptocurrencies.

HODL first appeared on the bitcoin talk forums in 2013, when user GameKyuubi created a thread titled “I AM HODLING.” In the thread, GameKyuubi lamented their poor trading skills before vowing to keep holding while ignoring market movements.

The term quickly turned into a meme within the crypto community. HODL first appeared as a Google Search trend one month later, in January 2014. Since then, GameKyuubi’s post has been viewed over 794,000 times — and counting.

As the crypto community grows, HODL has continued to confuse and delight newcomers. Take a look at the Google Search data: times when search volumes for HODL peak appear to coincide with historic bull runs.

There’s even a HODL Day that takes place every December 18 to commemorate the official anniversary of the date this term was first coined.

So, it’s a misspelling that caught on and may have transformed into an acronym. But how do you even pronounce it?

Google Search Trends for “HODL”

How Do You Pronounce HODL?

Quick answer: There’s no officially correct way to pronounce HODL. Some pronounce it the same as the word “hold,” while some claim it rhymes with the word “bottle.” Others prefer to call it a combination of the two — “hol-ddle,” if you will.

But no matter how you choose to pronounce it, what’s more important is the thinking behind it and the strategy it’s come to represent.

HODL’s Meaning As an Investment Strategy

The rant that gave rise to HODL centered on how notoriously difficult — some might say even impossible — it is to anticipate a cryptocurrency’s movement. Crypto volatility is legendary. Even if you expect it to go up and it does, the path it takes there could be all over the place.

For example, if you move too soon, a cryptocurrency's quick dive before resurfacing could consume potential profit or even initial capital. Of course, the same is true in the opposite direction if you were selling a crypto short, expecting its price to drop.

An almost knee-jerk reaction to this volatility is to avoid the short-term guessing game altogether by staying out of day-to-day trading. In this approach, you buy and stick with your investment over the long term.

For some, this has become synonymous with “believing” in a particular crypto. Sticking with an initial investment — even continuing to invest regardless of spikes and plunges — expresses confidence in its long-term viability.

More still don’t just believe in a particular crypto, but that cryptocurrency is the future of currency — that one day it will replace or eclipse fiat currencies in use and, therefore, value.

With all of that in mind, does HODLing really make sense?

Advantages of HODLing

Probably the easiest case to make for HODLing is to look at Bitcoin’s history. Its initial value was in the range of pennies and, recently, even after some dives and challenges, it was holding over the $20,000 level. Not hard to do the math to see the potential.

But other than this anecdotal support, are there any real advantages to a HODL approach? Yes. Here are a few to consider.

Smoothness over time. Volatility is scary, but given enough time, the ups and downs tend to smooth out. If your timeframe is long enough, it’s possible to ride out near-term volatility and benefit from an eventual increase in a crypto’s value.

Less time invested. Let’s be honest: Day trading takes time and constant attention. Done well, it can be rewarding. But a HODL approach lets you focus on other things rather than watch a crypto’s price fluctuate incessantly.

Deferred taxes. Depending on your local tax laws, gains from crypto investments may be taxable. If so, HODLing delays tax requirements until you sell the crypto and realize the gain.

Gains on near-term trades may be immediately taxable, often at a higher rate than long-term gains.

Checked emotions. It’s almost impossible to entirely separate emotions from buying or selling decisions. In fact, markets often move on emotion. But a HODL approach means you’ll likely have time to let emotions settle before making crucial decisions.

Earnings. HODLing allows you to put your crypto to work. Crypto staking allows you to earn rewards while your crypto is put to work by some blockchains or provides liquidity in certain investment pools.

But there are some potential downsides to HODLing.

Disadvantages of HODLing

No single approach is perfect. So while HODLing may have advantages, there are millions of day traders in the world who earn a living without it. And it turns out there are some real disadvantages to HODLing.

The emotion of the crowd. While you may be able to keep your emotions in check by HODLing, there will be tons of people out there who don’t. In fact, confidence — or lack of it  — is a primary driver of crypto value since most cryptocurrencies aren’t pegged to anything else.

In other words, you may believe a particular crypto has a future, but if the rest of the crypto world abandons it, it may decline and never recover. In this case, you can HODL it as long as you like, and it will do you no good.

Which crypto to HODL? HODLing may be an investment approach, but it’s not a method for choosing crypto. You’ll still need to be able to sniff out the crypto that will perform best over the long term if the HODL approach is to work. Pick the wrong one and HODL won’t help.

Losses never get cut. Sometimes, your best bet is to admit you made a mistake, change course, and retain some of what is left for another day. When investing, this may enable you to preserve some of your capital and put it to work elsewhere.

If you’re a dedicated HODLer, this may never happen and you could lose most of your investment with no opportunity to capture some of it, redirect it, and even recoup some of your initial loss.

When Might You HODL?

The very nature of HOLDing implies that it’s less about timing and more about long-term goals.   HOLDing concerns itself with what you do after you’ve bought some crypto.

That said, some who HODL also double down on an investment to demonstrate their long-term commitment to it. In this case, they may look at dips in the cryptocurrency’s price not as panic-inducing events, but as buying opportunities.

HODL by Another Name: The HODL Coin

Amazingly, HODL has become so embedded in crypto culture that its name crops up in other contexts. You may run into the term HODL as a specific crypto asset: the HODL coin. It is, in fact, a crypto token inaugurated in 2021 as part of a reward system on a particular blockchain.

The token takes the HODL name because its creators encourage users to hold onto their tokens over the long term to keep collecting rewards.

What Does HODL’s Meaning Imply for You?

The world of crypto is full of names, terms, and slang expressions.  Some are fun — like cryptocurrencies named after breeds of dogs — but some are confusing. The good news is when it comes to HODL’s meaning, it’s pretty straightforward.

For some crypto investors, a long-term approach makes sense. But for many others, it’s not the right fit. Learning the pros and cons of both approaches can make you savvier in your approach to crypto.

Of course, it helps to have the right platform partner, whether you decide to become a HODLer or not. A good partner gives you a wide range of crypto options to choose from. And it makes it easy for you to navigate trades and keeps fees low to help protect your investment.

A good crypto partner will also support practical investing methods, such as dollar cost averaging, that work well with a HODL mindset.

At Binance.US, we work with you to make your crypto journey both rewarding and fun. To begin today, visit Binance.US.

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Legal disclaimer: This material has been prepared for general informational purposes only and should NOT be: (1) considered an individualized recommendation or advice; and (2) relied upon for any investment activities. All information is provided on an as-is basis and is subject to change without notice.We make no representation or warranty of any kind, express or implied, regarding the accuracy, validity, reliability, availability or completeness of any such information. Binance.US does NOT provide investment, legal, or tax advice in any manner or form. The ownership of any investment decision(s) exclusively vests with you after analyzing all possible risk factors and by exercising your own independent discretion. Binance.US shall not be liable for any consequences thereof.

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