HODL: The Cryptocurrency Strategy of "Hold on for Dear Life" Explained

What Does HODL Mean?

HODL is a term derived from a misspelling of "hold," in the context of buying and holding Bitcoin and other cryptocurrencies. It's also commonly come to stand for "hold on for dear life" among crypto investors.

The term originated from a 2013 online post to the Bitcointalk forum where the typo appeared. The price of Bitcoin in 2013 was volatile at the time, surging to over $950 at the beginning of December, 2013, up from just over $130 in April of the same year. The poster encouraged people not to sell and that they were "hodling" [sic].

What Is HODLING?

At 10:03 a.m. UTC on Dec. 18, Bitcointalk online forum user GameKyuubi posted a purportedly drunk, semi-coherent, typo-laden rant about the user's poor trading skills and determination to simply hold his Bitcoin from that point on:

I AM HODLING

I type d that tyitle twice because I knew it was wrong the first time. Still wrong. w/e," GameKyuubi wrote about the now-famous misspelling of "holding." "WHY AM I HOLDING? I'LL TELL YOU WHY," he continued. "It's because I'm a bad trader and I KNOW I'M A BAD TRADER. Yeah you good traders can spot the highs and the lows pit pat piffy wing wong wang just like that and make a millino bucks sure no problem bro.

GameKyuubi concluded that the best course was to hold, since "You only sell in a bear market if you are a good day trader or an illusioned noob. The people inbetween hold. In a zero-sum game such as this, traders can only take your money if you sell." He then confessed he'd had some whiskey and briefly mused about the spelling of whisk(e)y. 

Within an hour, "HODL" had become a meme. Initially, the memes generated referenced the epic battle movies 300 and Braveheart, but there are now countless HODL memes floating around the internet. Many HODL memes now reference Game of Thrones' Hodor.

HODLING as a Strategy and Guiding Philosophy

HODL, as an acronym for "hold on for dear life," has become a mantra among crypto enthusiasts denoting a long-term approach to cryptocurrency investing. This approach mirrors GameKyuubi's rationale in the original post that novice traders are likely to botch their attempts to time the market, and should simply hold their coin.

For cryptocurrency maximalists, HODL represents more than a strategy for reigning in FOMO (Fear of Missing Out), FUD (Fear, Uncertainty, and Doubt), and other profit-eroding emotions. Long-term crypto HODLers stay invested because they believe that cryptocurrencies will eventually replace government-issued fiat currencies as the basis of all economic structures. Should that occur, then the exchange rates between cryptocurrencies and fiat money would become irrelevant to crypto holders.

Predictably, a meme best captures this HODL maximalist philosophy. Neo from The Matrix asks Morpheus, "What are you trying to tell me, that I can trade my Bitcoin for millions someday?" Morpheus responds, "No Neo, I'm trying to tell you that when you're ready … you won't have to."

When to HODL

Based on these principles, the best time to HODL is now, always, and forever. A true believer would always hold on to their tokens, even if markets crash or become extremely volatile. HODLing becomes an ideological belief about the long-term prospects of blockchain technology, cryptocurrencies, and the communities that have formed around them.

Other Crypto Slang Terms

The crypto community has adopted several acronyms and terms (often with accompanying emojis) in addition to HODLing. Many of these also overlap with terms used in meme stock communities and forums. Some of these include:

• FUD (fear, uncertainty, doubt): Misinformation, negative headlines, and dire predictions about crypto, which should be ignored by true adherents.
• FOMO (fear of missing out): People jumping onto bandwagon trades or buying into bubbles rather than regretting missing the next big thing
• Diamond Hands 💎🤲: Exhibiting extreme fortitude in HODLing, even as markets crash
• Hold the line: A battle cry to encourage others to stand firm with diamond hands in the face of volatility.
• Paper hands 🧻🤲: This is a derogatory slur leveled against those who fail to maintain diamond hands. These are perceived as weak individuals without conviction who sell their crypto too quickly.
• Mooning 🚀🌙: The idea that a stock will rise extraordinarily high, as if to the moon.
• Apes 🦍: Members of the crypto or NFT community. Some have attributed this to a meme related to the movie Rise of the Planet of the Apes, but others have suggested that the label comes from the banding together of “dumb apes” to take on the Wall Street elite.
• BTFD (buy the f***ing dip): Buying the dips means going long on a stock after its price has declined in the near term and is meant to be repeated after each such drawdown.
• YOLO (you only live once): As in, why not buy into a crypto token or NTF?

Can You HODL Stocks?

While HODLing is generally associated with cryptocurrency investors, the buy-and-hold investing strategy that it represents is not limited to crypto investing.

Many stock investors "HODL" their investments for long periods of time, although stock prices are almost always less volatile than the prices of crypto assets. Investors in stocks who buy and hold can benefit from long-term price appreciation while experiencing much less price volatility than is associated with cryptocurrencies.

The HODL Coin

HODL may also refer to a DeFI token on the Binance Smart Chain (BSC). HODL Coin (SHODL) was launched in May 2021. Much like the term itself, HODL encourages users to hold onto their tokens for rewards in the Binance coin (BNB) that are distributed every three days. The rewards are generated from taxes collected on transactions made by users, such as sale, purchase, or transfer of HODL tokens. The tax amount is converted into BNB tokens and a percentage of the gains is redistributed back to users from the collective liquidity pool.

The Bottom Line

HODL is an acronym for "Hold On for Dear Life". It is used in the crypto ecosystem to refer to a strategy of holding onto bitcoin holdings through its various price fluctuations and volatility. The acronym is a misspelling of the word "holding" by a user on an online forum. Typically used by Bitcoin maximalists, a HODLing strategy is similar to the conventional buy-and-hold investing strategy. HODL may also refer to the HODL token on cryptocurrency exchange Binance's Smart Chain. Users can earn rewards in Binance coin by depositing their tokens in a liquidity pool.