In the previous article, we mentioned about bear and bull crypto markets. Generally, people think that the bear crypto market is a terrifying situation because the values of cryptocurrencies are decreasing during the market. However, the thought is not totally true. In other words, individuals can utilize the bear crypto market in different ways, and HODL strategy is one of the ways. HODL strategy can be considered to profit from the increase in the value of digital assets. Via the article, you can access the details of HODL strategy, and then, start to apply the strategy in a good and proper way!
If you want to make an investment in a specific cryptocurrency or you are already an investor in the crypto market, you should consider HODL strategy for improving your investment plan. HODL stands for ‘Holding on for dear life’, and the strategy requires making digital asset in a wallet wait. The waiting process should be long-term; in other words, individuals should not sell their assets after waiting only 2-3 months.
HODL strategy is considered since 2013, and the notion sprang from a misspelling. In that year, a user of an online forum, that is about cryptocurrencies and blockchain technology, wrote ‘’I am hodling.’’ instead of ‘’I am holding.’’ when he mentioned about his asset in his wallet on the internet forum. Then, ‘hodl’ became a popular typo among people who are dealing with blockchain technology and cryptocurrencies. In addition to the ‘hodl’ notion, the individuals who apply HODL strategy for their investments are called ‘hodler’.
How can you implement HODL strategy?
Firstly, you should think about your desired outcome in terms of investment and the future of your cryptocurrency in your wallet, and then, you should act properly. After thinking, you should consider whether will apply HODL strategy. If you want to implement HODL strategy, you must keep your digital asset in your wallet for a long time without selling. In HODL strategy, there is a long holding time period, so you do not have to check your wallet regularly.
We know that the crypto market has an uphill (bull market) and downhill (bear market) structure. You can benefit from both bull and bear crypto market by using HODL strategy. Generally, investors buy a digital asset at a low price during the bear crypto market, and they maintain HODL strategy during the bear market. Then, they sell their digital asset at a high price when the bear crypto market turns into the bull crypto market. At that point, we can say that investors finish their HODL strategy by selling their digital asset at a high price. As you can understand from the information, you should wait for the transformation of the bear crypto market to the bull crypto market for stopping HODL strategy.
Should you consider HODL strategy?
Like every financial strategy, HODL strategy has some advantages and disadvantages. If we think about its pros, we can firstly mention that newcomers to the crypto market can understand the logic behind trading. Also, people can avoid the risks of swing trading, day trading, and high-frequency trading. Short-term investing strategies can present faster-making money, but you can learn cryptocurrency trading in a good way with the help of HODL strategy. On the other hand, we can mention some disadvantages of the strategy. For instance, the required time for HODL strategy is long, and the circumstance can be a con for investors. Furthermore, individuals can miss some opportunities coming from short-term price fluctuations of the crypto market due to the strategy.
HODL strategy is an investing technique that should be applied for an extended time. The strategy can be started during the bear crypto market, and it can be finished when the bull crypto market begins. If you want to develop your investment, you can consider HODL strategy in the crypto market!