In 2013, GameKyuubi, a user of the popular crypto forum Bitcointalk, ironically wrote that he was a bad trader, on whose unsuccessful trades good traders earn. And the only way out for him is just to keep the purchased crypto assets, not paying attention to what is happening on the market here and now. And I must say that this approach is not at all devoid of logic.
For many participants of the crypto market, and especially for beginners, trading resembles walking through a minefield - a lot of transactions, financial losses, a desire to "win back" everything faster, sometimes spontaneous luck, then failures again. And so on in a circle. In addition to money, such trading takes a lot of time, nerves and, no matter how loudly it is said, health. HODL also allows you to reduce speculation to a minimum and just wait, not succumbing to the temptation to sell assets after a corrective fall in their price. It is no coincidence that HODL has a playful, but at the same time quite correct interpretation: Hold on for dear life — "hold on with the last of your strength." Therefore, walking is an ideal solution for novice traders, as well as for those who simply do not have time for active trading.
Is walking effective? Are there any risks?
The answer to both questions is the same - yes. First, let's look at efficiency. Let's say you bought bitcoin 10 years ago - at the end of 2022. Then 1 BTC = $13.54, that is, with the invested $ 100 you could buy 7 bitcoins, which today would bring $137,263 at the current exchange rate. Not bad, right? At the same time, it is not always necessary to wait for years and decades - for example, the Solana token at the beginning of 2021 cost only $ 1.52, and in early November it reached $ 260, giving investors a cosmic 9800% in 11 months. Of course, such a fantastic return can be obtained not always and not on all assets, but there is such a possibility and probability, and this is obvious.
Now as for the risks. "What if bitcoin didn't grow?" — you ask and you will be absolutely right. No one can guarantee that this or that cryptocurrency will grow, and much, thereby managing to justify sometimes a very long wait. Therefore, it is also important to follow a very simple and well-known rule - do not put all the eggs in one basket. It is not worth buying any one cryptocurrency for all the money - buy several, distribute your money, and hence the risks. This is called portfolio diversification. Yes, some currencies may fall, some may stand still, but others will rise, and you will still get your profit with a high degree of probability.
Bottom line - the key pros and cons of the strategy
Of the main advantages of HODL, the following can be called - the strategy saves your time and nerves, helps not to be disappointed quickly in the crypto market due to unsuccessful operations, giving time to study it and prepare for more active trading. You can safely combine it with work or study without sitting at the terminal all day.
But there are also disadvantages, of course, because HODL, like any other strategy, is far from the holy grail. Firstly, it is "long money". That is, it takes months, and often years, to make a profit. Secondly, not all cryptocurrencies can and should be used, but only those that have gained great popularity among investors, financial systems and payment institutions. Of course, you can bet on a "dark horse", an undervalued coin here and now, which will take off into space and become a new star, but here again there are no guarantees for the success of this event. And, of course, psychological stability and faith are still needed, because, for example, since the appearance of the hodl meme, bitcoin has experienced dozens of cycles of loud ups and deafening falls.
Nevertheless, HODL works, and very efficiently, and requires minimal knowledge about the market. The mere fact that this strategy has been popular for almost 10 years speaks volumes.