HODL is a term that anyone who has spent even the smallest amount of time in the crypto space will have come across. Even those that don’t know how the famous term originated, or what its deeper meaning suggests, understand the basic concept, although the vagaries of time have led to its meaning and conception becoming distorted. We look at where the term actually came from and why it resonates with the community so much.
I AM HODLING
The origin of the term HODL comes from a post on the BitcoinTalk forum dated December 18, 2013. BTC had hit $1,150 just two weeks prior, but had spent the time since in a steady decline following China banning banks from handling crypto-derived funds, dropping to $420 on the day itself, at which point the following post appeared on the forum:
This post has now become a legendary call to arms for anyone who is faced with huge losses following a BTC crash, which is most people in 2018. It resonated because it managed to encapsulate the emotions of a novice trader, the reality of trading an asset as volatile as BTC, and the ultimate faith that the writer has in Bitcoin itself. Presuming he did indeed HODL and didn’t sell out as the cryptocurrency plummeted all the way down to $183 later that year, he would have been richly rewarded. This is the final unwritten message in the blog – Bitcoin always comes back. The term ‘HODL’ quickly took off and became a stock phrase for keeping the faith in your coins during testing times.
The Wisdom of HODL
The question of whether HODLing really is the smartest move is debatable, and depends almost entirely on where your coin is in the market cycle. Looking at the 2017 cycle as an example, anyone HODLing in September 2017 as BTC crashed over $1,000 would have been richly rewarded, as it was clear that the general trend was up and that a recovery was likely imminent.
On the other side of the bull run, when the market started to tank having hit $20k, it was clear to those with experience that the bull market was over, and that selling was the best option in order to realize profits. Those who continued to HODL as BTC went from $10k to $8k and then to $6k were losing the advantage of selling, and when it finally fell through the floor to $3,200 it was clear that the risk/reward scenario had changed and that HODLing was now the better option.
HODLing requires patience and confidence in the asset, especially if you plan to do it through an entire bear market. In the case of Bitcoin however patience is almost always rewarded, as this poster eventually found out… hopefully.