What is the HODL Strategy? A Beginner’s Guide

HODL Strategy
HODL Strategy

There is one feature that distinguishes Bitcoin and crypto investment from all other asset classes: volatility. Bitcoin or any other crypto asset can change by double-digit percentage points in a single day. For most traders, this is the dividing line between profit and outright failure. As a result, traders need to devise several trading tactics to survive the high-risk environment.

HODL is one of these investment strategies. It isn’t entirely new, as it shares some characteristics with tactics used in the ordinary financial sector. However, it is popularly applied to Bitcoin and cryptocurrency in general. In this post, we’ll look at how the HODL strategy came into existence. We’ll also look at some of its key features and how they can be used.

Buy Crypto and HODL

The term “buy and hold” refers to a passive investment strategy in which traders purchase an asset to hold it for a lengthy period, regardless of market movements.

This method is most commonly used in long-term investment portfolios, where the goal is to just get in the market and not worry about timing. It allows crypto enthusiasts to choose how to buy bitcoin in India and keep it. The theory behind this method is that timing and entry price will become less critical over a long enough time frame.

The first huddle for crypto investors is finding a trusted platform to buy bitcoin. It is important to invest in bitcoin on a trusted and secure platform like Remitano. Apart from being the safest platform to trade, Remitano allows users to create a crypto wallet in less than 5 minutes to begin their investment journey.

It is also important to know that Remitano is offering a coin-back policy for both new and current crypto users on the platform. With each coin swap transaction on the exchange, users have the opportunity to receive a refund of up to thousands of dollars and a series of special incentives

The buy-and-hold approach is always focused on fundamental analysis, while technical indicators are rarely used. The method is also unlikely to include assessing the portfolio’s performance regularly — only once in a while.

While buying and keeping Bitcoin is a well-known cryptocurrency strategy, the purchase and hold strategy may not be appropriate for other cryptocurrencies. HOLDing is only possible if you have a safe and secure wallet to keep your crypto assets.

HODL: Philosophy and a Strategy

HODL quickly became a catchphrase for a cryptocurrency investing strategy that avoids trading based on short-term price movements. This strategy is similar to GameKyuubi’s: Rookie traders are more likely to fail in their attempts to time the market and lose money or make less money than if they simply kept their coin. If you are a newbie and looking for how to buy cryptocurrency in India, you should start by HODLing before exploring other tactics.

Aside from short-term fluctuations, bitcoin’s long-term volatility contradicts conventional logic. From 2011 to 2013, the price increased by 52,000 percent before plummeting by more than 80% the following year. It has since risen to more than 17 times its previous peak before plummeting by half. Logical arguments have been presented throughout the cryptocurrency’s history that it would go “to the moon” or crash to zero.

All of this volatility and prognostication is washed away by holders. They just HODL, which helps them avoid two dangerous tendencies: FOMO (fear of missing out), leading to overbuying, and FUD (fear, uncertainty, and doubt), leading to underbuying.

HODL symbolizes more than a method for reining in FOMO, FUD, and other profit-eroding emotions for hard-core cryptocurrency enthusiasts, known as maximalists. True believers hoard because they believe cryptocurrencies will someday replace fiat currencies and serve as the foundation for all future economic arrangements. As a result, they regard the currency exchange rate of cryptocurrencies as meaningless.

This maximalist attitude is best captured, predictably, by a meme. “What are you trying to tell me, that I can trade my bitcoin for millions someday?” Neo (from The Matrix) asks Orpheus. “No, Neo, I’m trying to tell you that when you’re ready… you won’t have to,” Morpheus says.

Etymologies of the People

HODL is frequently explained as an acronym for “hold on for dear life” or a variant on that theme. While these etymologies sometimes do a decent job of conveying the sense of the word, they are not how it came into existence. In 2013, a lucky misspelling resulted in the name HODL.

What makes a token a good option for HODLing

The similarities with fundamental analysis begin here. To determine whether a crypto asset is suitable for a HODL strategy, one must first examine its fundamentals. For any asset, there are a few things to look into:

Use case: What is the goal of this digital asset? Will it be implemented in a large-scale ecosystem? Who will make use of it? Is the use case reasonable? When it comes to determining the long-term viability of crypto assets, those are the issues that must be answered.

Total quantity available: Another critical consideration is the number of tokens available. The way crypto tokens are created necessitates that the total supply is deterministically coded within the blockchain on which they are formed. Understanding the number of coins and the maximum coin population can help establish market capitalization.

Token distribution: Tokens are not entirely sold to the public at the same time. In most cases, a portion is sold to raise funds, and then a distribution schedule is established. Every time the token’s supply grows, the price may fall. Therefore understanding when tokens will become available in the future is critical for a HODL approach.

Adoption of token: How many people are interested in purchasing the token? What is the trade volume daily? Is it more common for people to buy to use the token or to speculate? When it comes to a token, these are some of the most critical questions to consider.

Adoption by institutions: When a crypto token has institutional buyers, it is one of the best indicators for a good investment. When significant institutions buy it, the asset’s volatility decreases over time.

There are many more factors to consider before choosing to HODL a coin. Some of the more advanced analytical stem threads are the product development timeframe, progress accomplished, the people behind the project, market conditions, and so on. To lessen the risk, a potential investor must be well-versed in all aspects of the project.

A person must be able to plan an information strategy after the initial inquiry. After knowing how to buy bitcoin in India, the investor is HODLing throughout this time, and it is critical to be informed about the underlying asset’s status. Regardless of how good an investment is, certain occurrences might send the entire crypto market into a tailspin. As a result, it’s critical to follow the trend of the crypto after buying.

While you are holding bitcoin or any other crypto asset, you can earn freebies in coins and cash on the side with Remitano.

As a bonus in this piece, the exchange Remitano is planning to launch its coin called RENEC, just like the Binance coin which is worth over $300. At the moment you can only mine using a Remitano mobile app. You can start mining RENEC today on Remitano.

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