More and more people are getting involved in the investment of cryptocurrency and given its huge rise in recent months it is easy to see why. As many people get used to this world, they are being met with a lot of jargon which they are trying to decipher. Those within the industry like Robert Testagrossa often recommend that people do something called ‘Hodling’. Now many fail to understand what this is, or why they should be doing it, something which we are going to look into today.
What is Hodling?
Hodling is actually a word which has been created just for crypto investors and it is nothing more than a re-speling of the word ‘holding’. And so those who do this, are those who invest in crypto and then sit tight on their money, without selling or buying with what they have sold. The opposite of this would be someone who buys crypto, and then looks to sell when the price is high, and buy once again when the price comes down.
The main reason why investors are told to hodl is that the cryptocurrency market is one of the most volatile on the planet. In fact it is this level of volatility which gives so many people nervousness when it comes to investing. The reason why crypto is as volatile as it is, comes down to the relative uncertainty which many have in the market. Another reason is that whales, investors who accumulate massive amounts of crypto, are able to make the price swing as and when they choose, at least for certain currencies.
Eve those who are experts in the financial markets will not look to trade or day trade crypto, mainly because of the volatility which we have just mentioned. Owing to this, the idea is that the average, casual investor, will also be unable to make any real money from trading. In some cases people may get lucky with buying and selling crypto, but in the main those who try to buy low and sell high will fail, and possibly lose money as a result of their actions. This is why the idea of holding on to what you have bought makes the most sense.
Fear of Missing Out
FOMO happens within crypto all of the time and so many people are motivated by this. Those who are however, often find that they end up buying when the price is high and then panic selling as it drops. The perfect solution to this however is to simply sit on what you have bought and let the investment ride.
And finally the biggest reason why this is recommended is that crypto is seen by most as being the future of money. Because of this they see no point in trading at the low end of the scale when many of these currencies could easily rise by 100x in the next decade. For these reasons, hodling is very much recommended.