The term "HODL" (/ˈhɒdəl/ HOD-əl), or people who refer to themselves as "HODLers", comes up time and time again when dealing with Bitcoin or cryptocurrencies. What is it all about? What does this abbreviation stand for? Find out the answer in this short "Blocktrainer 1×1".
If you search Google or other search engines for the meaning of "HODL", you will find many articles that explain it as an acronym for "Hold On for Dear Life". In German, this could be loosely translated as "Hold on to your coins, even if your life depends on it". Although this would come pretty close to the current meaning, it does not really do justice to the origin or origin of the expression and should therefore be described as "fake news".
The term can actually be traced back to a typo made by a user in the well-known Bitcoin forum "bitcointalk" back in 2013. At that time, the price of Bitcoin had risen from under 15 dollars in January to a high of over 1,100 dollars at the beginning of December 2013. On December 18, 2013 - possibly in response to reports of a Chinese crackdown - the price of Bitcoin fell by almost 40% from $716 to $438 within 24 hours. This prompted a forum member with the nickname "GameKyuubi" to write a post in which he explained that he had no intention of selling his Bitcoins, but would continue to hold them as he knew that his trading skills were very limited and that he would never get the right entry and exit anyway. As he had already had a few glasses of whisky when he wrote the text and was therefore already very drunk, he made a small typo in the headline, which would later go down in the history of cryptocurrencies. "I AM HOLDING" became the famous "I AM HODLING". Here is a German translation of the entire article for you. Spelling and typing errors due to the author's alcohol consumption have of course been corrected by me:
ICH HODLe
I typed this headline twice because I realized the first time that I had mistyped it. It's still wrong, but well, it's the weekend.
My girlfriend is out at a lesbian bar and the Bitcoin price has totally crashed.
WHY AM I HOLDING? I'LL TELL YOU WHY. The reason is that I know I'm a bad trader. Yes, you good traders, you can easily recognize when we are at a high and when we are at a low and make a million just like that - no problem bro.
The so-called "weak hands" act in the same way and are constantly thinking "OH MY GOD, EVERYTHING IS FALLING, I HAVE TO SELL". Hihihi... and then when the SMART traders, WHO KNOW WHAT THEY'RE DOING, start getting back in and buying, the weak hands' assholes are on fire again.
I do not belong to this group. When the traders start buying in I am already a part of the market so guess WHO THESE DAY TRADERS WILL BUY? NOT ME!
Those snarky comments á la "OHH YOU SHOULD HAVE SOLD". YES, ACH WHAT? NO SHIT, I SHOULD HAVE SOLD. BUT I KNOW NOT EVERYONE IS AS COOL AS YOU".
During a bear market, you only sell if you're a good day trader or a disillusioned newbie. All people in between just hold their bitcoins. In a zero-sum game like this, traders can only take your money if you actually sell.
Yes I've had a few glasses of whiskey.
Actually, it's spelled whiskey on the bottle. Well, it's the weekend. Why don't you sue me?
(But only if the fine can be paid in BTC).GameKyuubi on 12/18/13 10:03 AM at bitcointalk.org
As this post was so well received and described exactly what many other Bitcoin users were also thinking, the term "HODL" quickly became a meme. That's just how the internet works. After less than an hour, the first images (excerpts from the movie 300) were already available that took HODL as their theme. Today, there are hundreds of them, as well as T-shirts, baseball caps and coffee mugs. HODL became famous.
HODL soon came to epitomize an investment approach to cryptocurrencies that avoids trading based on short-term price movements. This approach reflects the underlying principle of GameKyuubi : inexperienced traders are likely to mess up their attempts to time the market and lose money or make less than those who simply hold their coins.
Short-term fluctuations aside, the long-term volatility of Bitcoin defies logic. The price rose by 52,000% between 2011 and 2013, only to fall by more than 80% the following year. Since then, it has repeatedly shot up to many times its previous high, only to fall by half again. There are always people who talk about "going to the moon" in phases of an upward trend and others who (especially in downward phases) already see the end of Bitcoin approaching. As is so often the case, the truth lies somewhere in between.
HODLers want one thing above all, namely to counteract two well-known destructive emotions:
FOMO (fear of missing out), which can lead to overpriced purchases, and FUD (fear, uncertainty and doubt), which can lead to selling below value. Both lead to less profit or even losses in the long term.
If, like GameKyuubi, you are not a good trader or are quickly overcome by FOMO and FUD, you should ask yourself whether HODLing might not be the better strategy for you.
Finally, I would like to draw your attention to the article "Ich Hodle!", which also addresses this topic.
What kind of investor are you? Trader or HODLer?
Feel free to tell us more in our Blocktrainer forum.
