The term “hold(HODL) Bitcoin” was first used by the cryptocurrency community to refer to holding (rather than selling) one’s cryptocurrency. It was a mistake for the word “hold” in a bitcointalk.com forum.
The price of the cryptocurrency has decreased by almost two-thirds from its peak in December and over 47% since the year’s beginning.
As a result, the phrase “HODL” is frequently used in the Bitcoin investing community. Here we shall look into its benefits.
Benefits Of HODLing Your Crypto
With the rise of different Crypto platforms like biticodes that offer easy trading opportunities, HODLing is becoming less likely. However, there are some great benefits to waiting for a long term when you make such investments—
Saves You From FOMO And FUD
One of the great things about long-term crypto investment or HODLing is that it saves you from FOMO (fear of missing out). With regular investments, you’re constantly worried about the next big thing, which can be very stressful.
Cryptocurrencies are designed to grow over time, so there’s no need to worry about whether they’ll survive another day.
It’s also important to remember that while FOMO and FUD (fear, uncertainty and doubt) are common emotions when investing in cryptocurrency, they’re also part of the market cycle.
If you have a steady income stream (like a pension or salary), then over time, your portfolio will naturally become less volatile as more people buy into your asset class.
HODLing is the most popular strategy among investors in the crypto world. It means holding onto your crypto assets even when the prices dip. This helps you to reduce stress and time pressure while keeping your crypto investments safe.
When money is locked up in crypto, you are not as concerned about its value fluctuating or losing value over time. This can benefit your mental health, as well as your outlook on life in general.
You will be less stressed out and more relaxed than someone who has just bought into an ICO or purchased large amounts of crypto with fiat currency (USD/EUR).
When you HODL, you do not panic sell because you fear losing money. Instead, you stick to your plan and see how long it takes to recover.
Allows You To Fight Volatility
Extreme volatility is the most common reason people do not invest in cryptocurrency. With all these new coins popping up daily in the market, it becomes extremely hard for investors to choose which one to invest in.
If you want to invest in cryptocurrency, you must first understand that there is no guarantee that your investment will go up or down. Therefore, if you want to make money from your investments, you must withstand volatility.
Long-term crypto investment allows you to fight this volatility by investing in a coin for long periods. For example, HODLing may provide enormous returns in the cryptocurrency world, usually in just a few years.
Helps Defer Tax Liability
HODLing your digital assets allows investors to defer tax liability and generate passive income over time.
This is especially useful for those looking to retire early or needing a large influx of capital into their portfolio.
Long-term crypto investments also allow investors to hold onto their investments without paying taxes until they are sold. This can help investors avoid paying high capital gains taxes when they sell their holdings.
Many long-term crypto investors will hold onto their investments indefinitely, so they won’t have to pay any capital gains taxes until they sell them later.
Increased Chances Of Profit
One of the benefits of long-term crypto investment is that it allows you to increase your profit.
This increase in profit is possible because of the gradual growth of the market. Therefore, when you invest in a cryptocurrency, you are helping to build its value, which will eventually lead to an increase in price.
Another advantage of long-term crypto investment is that it helps ensure a safe investment. You can be sure that your money is being invested in a way that provides no chance of losing any value or stealing money.
However, with long-term crypto investment, there’s no need to worry about this, as your funds are always kept safe.
Consider the Drawbacks As Well
While enduring weak markets can be challenging, investors should resist the urge to exit, especially when doing so at a loss. Instead, investors must make enough money available in the event of forced sales or unanticipated liquidity requirements.
Regulation of cryptocurrencies and their widespread use in the future are still too unpredictable to consider digital assets as safe and dependable investments.
Your investing plan may be affected by the benefits and drawbacks of day trading and HODLing. For example, private keys, crucial for protecting assets, are more likely to be lost.
Investors should be familiar with how to protect their assets using the self-custody and privacy options available.