After soaring to new heights, Bitcoin lost more than 80% of its value—twice—only to reach a new high in 2024.
Source: StockCharts.com; annotations by Encyclopædia Britannica, Inc.
HODL is a cryptocurrency slang term that refers to holding a crypto coin or token for the long term. It comes from a typo in a 2013 thread titled “I AM HODLING” posted on BitcoinTalk, a cryptocurrency forum. The misspelled term in its all-cap format attained viral popularity among crypto investors and has since become the crypto-world’s equivalent for “buy and hold.”
Crypto enthusiasts have also co-opted the term HODL as an acronym for “hold on for dear life.” This usage is particularly appropriate during times of intense volatility, such in 2021 and 2022, when the price of Bitcoin, the original cryptocurrency, fell 75% from its high near $70,000 per coin. Although this interpretation may obscure the term’s erroneous typographic origins, it nevertheless retains the original meaning and intent of the word (“hold”) popularized in its misspelled form.
Short-term trading vs. long-term investing
Anytime you exchange money for an asset—a stock, bond, or even a cryptocurrency—you should understand your objectives and your willingness to tolerate risk. Are you looking for a quick score? Planning to will it to your grandchildren? Or somewhere in between? In other words, are you an active trader or a long-term investor?
In general, trading is based on short-term price action, and traders use technical analysis to spot price trends. But when you invest for the long haul, you expect the asset to increase in value and/or offer returns—dividends in the case of stocks and interest in the case of bonds—and use fundamental analysis to help guide your decisions.
To HODL or not to HODL crypto assets
With crypto assets, fundamental metrics such as a P/E ratio, dividend rate, or yield-to-maturity do not apply. Instead, HODLers may invest in the “scarcity value” of a finite crypto such as Bitcoin—similar to the way investors view gold and precious metals as assets that may hold their value amid inflation.
HODLers may also point to emerging use cases for crypto and blockchain—the technology that underpins cryptocurrencies—hoping that, someday, cryptocurrencies may reflect fundamental value in the way traditional assets currently do. And, although the practice is risky, HODLers may also stake their crypto assets (i.e., agree not to trade or sell them) and, in return, receive a yield based on current supply and demand.
