While the cryptocurrency market has seen high volatility in the past week, many investors have refused to sell their cryptos at a discount because they still believe in certain projects. We can thus speak of HODL , but then, what does that mean? Is this really a good strategy?
A popular term in crypto
Renowned in the cryptosphere, the term HODL first appeared in 2013 on a crypto-currency forum. It is a term derived from the word “ Hold ” in English which means “to preserve” in French. The term HODL also refers to the acronym “ Hold on for dear life ” – understand “Tenir bon pour la vie”.
Thus, HODL a crypto represents a strategy through which a crypto investor maintains faith in his assets, regardless of their value. Finally, the idea of HODL its cryptos makes that when the value of a crypto drops, the investor has the belief that in the long term, the crypto will rise again.
Thus, even in an extremely volatile period, as may have been the case last week, the investor must not give in to pressure and he must therefore resolve not to sell his crypto-currency.
HODL its cryptos: a good strategy?
Of course, it is not necessarily a good idea to HODL all your cryptocurrencies . Indeed, when it comes to keeping a crypto, we only take into account the long term. To HODL a crypto, you must be convinced that it can resist a bear market, or in a less serious case, a downtrend.
For example, cryptos like Bitcoin or Ethereum have real utility. Thus, the latter have been able to demonstrate their resilience and the interest of keeping them over the long term .
HODL vs Staking: what are the differences?
While HODL a crypto will not necessarily make you money at the moment T, staking can ultimately be a suitable solution.
Indeed, during the staking process , you keep your cryptos in a locked wallet. The logic is similar to HODL, except you cannot unlock your cryptos whenever you want.
Like savings books, staking your cryptos allows you to generate passive income through interest.
While HODL is a strategy to be applied over the very long term (several years), staking can be applied over a short period (a few months for example). Some platforms are also specialized in staking. One thinks in particular of the Aqru platform which offers really attractive APY (Annual Percentage Yield).