What Does “HODL” Mean?
You’re scrolling through social media platforms, and you encounter someone saying that they’re “HODLING” or telling someone else to “HODL.” Confused? Here’s what the word “HODL” means in the world of cryptocurrency and finance—and why it’s not misspelled.
HODL = HOLD
“HODL” is a cryptocurrency-related slang that stands for the word “hold” which is misspelled. It often refers to retaining crypto assets that you own for an extended period, even when the market movement is highly volatile. “Hodl” is meant to encourage people to not impulsively sell-off when a cryptocurrency drops dramatically or rises to become highly profitable to sell.
“HODL” is also an acronym for “Hold on for dear life.” You will often see the term in various cryptocurrency forums and social media circles and pages. Some influencers even encourage their followers to “hodl” various crypto coins as part of their long-term strategy.
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Origin of ‘Hodl’
The word “hold” has been used for a very long time as part of the buy-and-hold strategy in finance. This investing method involves buying a financial asset or a coin and holding it for an indefinite period of time. This is related to the view that an investor should not be swayed away by short-term market movements and look to the long-term view.
The term “HODL” originated from a post made in 2013 on cryptocurrency forum Bitcointalk shortly after a move by the Chinese government caused the price of Bitcoin to fall drastically within a day. An intoxicated member typed out a post entitled “I AM HODLING” in response, detailing his general lousy luck with investing and his desire to keep holding onto his assets in the future.
Soon after that incident, the term “hodling” became commonplace in the enthusiast community of cryptocurrency. It made its way into memes and onto social media and became a way of signaling a token owner’s desire to hang onto their coins.
“Hodl” and Cryptocurrencies
Many cryptocurrency tokens, even the relatively stable ones such as Bitcoin and Ethereum, frequently experience very volatile market swings. Cryptocurrency prices are also prone to the movements of whales (a term used for people or organizations holding a very large amount of a particular token). If even one whale decides to sell a particular token, they could tank the price entirely which can cost these tokens to fall 100% one month and then rise 300% within the next few months.
“HODL” is viewed as a way to combat these price swings in market. An asset-holder who follows the strategy does not sell, even as the market changes or dips. People who “HODL” do not even pay close attention to the day-to-day market movement of crypto coins, instead prefer to gain from long-term returns of their tokens. This is the reason why “hodl” has become such a popular term is the general volatility of the prices of cryptocurrencies.
Why Do People “Hodl?”
One of the biggest reasons why people view “hodl” as a viable strategy is their belief in the underlying technology and the use case behind it. Bitcoin and most other cryptocurrencies are based on blockchain technology, which has many uses, including a way to safely and anonymously make payments over the internet just through crypto wallet addresses. This is bringing to the belief that Bitcoin maybe the future of all financial transactions rather than fiat currencies like Dollars and Euros.
For many cryptocurrency founders, “hodling” is an intriguing prospect. The value of a single Bitcoin has gone from under a dollar when it first came out more than a decade ago to five-digit figures in recent times. Despite high market volatility, many cryptocurrency owners believe in the long-term financial prospects of cryptocurrency tokens. On the other hand, many other people believe that buying cryptocurrency is equivalent to gambling.
Many people also believe that the values of cryptocurrencies are better when people buy and not sell off their tokens in volatility. That is why “hodl” is such a well-used term in the community—it’s often said to beginners who might fear about holding such a volatile asset. “HODL” combats what crypto users call “FUD,” which is an acronym for “fear, uncertainty, and doubt.” FUD can include anyone from naysayers to governments to negative presses on the issue of cryptocurrency.
Using “HODL”
“HODL” is generally used to refer to cryptocurrencies and not other assets. If you want to use the term “hodl,” reserve it for conversations about tokens and crypto coins or you could be misinterpreted.
If you run into people telling you to “hodl,” there’s a good chance that you’ve encountered cryptocurrency enthusiasts. Be sure to use good analysis in making critical financial decisions, and invest into cryptocurrency at your own risk. Never invest more than you can afford to lose.
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