Who would’ve known that the term “HODL” came about by mistake? The term refers to someone keeping their bitcoin or other forms of cryptocurrency long-term and refusing to sell, no matter how high the price goes. It has become a staple term for the crypto industry in many ways, and yet it probably shouldn’t even exist.
Where Does the Word “HODL” Come From?
“HODL” was initially designed to be “HOLD,” a word that any English speaker would understand. The person writing it meant to say they’re going to “hold” their bitcoin forever, but instead they wrote “HODL” by mistake. The word came about in late 2013 after bitcoin took a nasty dive in price. A person in an online forum was not marred by the dying price and wrote, “I AM HODLING.”
While the term may have been incorrect and has become something of a meme over time, many analysts say those engaged in HODLING arguably know the best approach to a market that has proven extremely volatile and unpredictable. Theresa Morrison – a certified financial planner in Arizona – recently stated in an interview:
The holding part of it is important because it’s a nascent industry, and as a retail investor, you are not well-equipped to be able to capture the volatility and to trade the assets.
The person that initially talked about HODLING explained in a follow-up post roughly nine years ago why they were doing so. They wrote:
WHY AM I HOLDING? I’LL TELL YOU WHY. It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.
Morrison says that patience can be an extraordinary virtue in the world of digital assets. She says that it’s always good to think long term and that many people have ultimately missed out on big profits simply because they invested in bitcoin or some other form of crypto and then sold everything the minute the currency dropped in price. She comments:
As a buyer of crypto, you want to have an investment policy statement. You want to know what is going to change your mind to sell. Otherwise, you should be a HODLER.
One user on Reddit said the following:
There is nothing wrong with locking your profits. Don’t let anyone make you feel bad about it. Even if you lock your profits at 50 percent, you are still 50 percent up.
David Duong – head of institutional research at crypto exchange Coinbase – says that HODLING has established a whole separate culture in the world of crypto. For many, crypto represents a major change in the world of finance – a change bigger than anything they could possibly fathom. They believe that crypto can lead to decentralized products that are free from government and third-party control.
An Extraordinary Form of Technology
Duong says:
The people who are in the space very much have a belief about the transformative nature of the technology itself.
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