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Holding Bitcoin: What it means to be a Bitcoin HODLer
- What does it mean to hold Bitcoin?
- Trading or holding, choose your path
We already know that high levels of volatility surround the Crypto sphere everyday. As Crypto is mostly a speculative market, some traders use holding as a strategy to avoid two common negative tendencies in the market: FOMO (Fear Of Missing Out) and FUD (Fear, Uncertainty and Doubt). Holding is, in simple words, the action of stacking coins regardless of the price and investing confidently in the long-term value of Bitcoin.
It is important to mention that Holding or as it is known in Crypto slang “Hodling”, is also a strategy that the large majority of Bitcoin maximalists use in the belief that crypto will eventually replace Fiat currencies. Moreover, they see the fiat exchange rate as irrelevant.
The bullish perspective for Bitcoin is justified since it is based on the assumption that Bitcoin always follows the same patterns of previous trends. In other words, it will rise again. However, the bearish stance is supported by a growing negative sentiment towards Bitcoin throughout the years. Furthermore, scandals associated with the “Father of all Crypto” also justify the selling Bitcoin stance.
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Should you hold Bitcoin?
A big cloud of uncertainty hovers over the future of Bitcoin. As result, experts highly recommend that traders with smaller amounts to invest opt for the hodling strategy. There are two clear advantages to this approach:
First, it is important to remember that Bitcoin HODlers are investing in the long-term outlook of Bitcoin’s value. Their main objective is to buy the coin and seek larger returns by holding it over a long period of time. In terms of long-term strategies, this is one of the best options for new investors that can’t invest large amounts of money in day trade.
Second, liquidity and volatility matter less since HODlers are long-term investors that are holding coins through the market’s up and downs. HODling is a strategy that supports the idea that the ‘do nothing’ approach is the best choice.
By holding on to crypto assets, investors are investing in the economy as a whole. Conversely, traders only add to their own wallets without adding value to the economy. Remember that the majority of HODlers are making investments based on what they think is the future of currencies.
Trading or Investing? Find your path
The majority of new traders join the industry to trade and attain instant success. In previous blogs, we have highlighted the importance of practice and experience in order to trade effectively. However, some traders still believe that trading is a get-rich-quick scheme. Unfortunately, this is a perception that is mostly promoted by traders who work as market manipulators for their personal benefit.
Even though it is occasionally possible for traders to obtain huge profits from one single trade while day trading; speculation would be the main driver of the trade. Moreover, 95% of traders lose money, which is why it is important to invest smart and to stop relying on hope and speculation. Moreover, according to Bloomberg, 80% of the total transaction volumes in Bitcoin trading exchanges are made by bots. This means that traders can’t outperform bots since they always obtain the highest bid and/or lowest ask prices in the market.
To choose between holding and day trade cryptocurrencies, you need to ask yourself one question. Do I really believe in cryptocurrencies?
The main differential aspect between Bitcoin traders and Bitcoin HODlers is that day traders enter and exit trades at the right time. Furthermore, they see the mass adoption or even failure of cryptocurrencies as something irrelevant. Their main objective is to earn profits by timing their entry and exit points correctly, then move on.
If you are a firm believer in cryptocurrencies taking over Fiat in the future, HODling is the path for you. Invest in the coin, leave it and plan to invest consistently over time, regardless of price fluctuation or volatility levels. However, it’s vital to remove all emotions and uncertainties from the process.
Checking the market everyday will trigger selling emotions when the price plunges. However, if you are ready to invest for long-term results, then adopt a passive and patient stance and remember that you are placing trust in the growth that will come in the next years.