What are the pros and cons of hodling Cryptocurrencies?
HODL is an everyday slang among Cryptocurrency traders. It was derived from the word ‘hold,’ and refers to a crypto trading strategy where individuals purchase crypto coins and store them in their wallets. Instead of hourly or daily trading, they hold the assets over a long period and sell when the prices are up.
But what are the pros and cons of hodling Cryptocurrencies?
CONS:
- REQUIRES PATIENCE ( This long-term investment strategy requires a lot of patience and mental capacity )
- NOT AWARE WHEN TO TAKE PROFITS ( When there is a huge profit hodlers may continue holding , hoping the price would rise further,but they end up losing.)
- LIQUIDITY ( Since this is a long-term strategy, it means that your funds would be tied up for a long time. This may result in missing other investment opportunities.)
PROS:
- SIMPLE ( Hodling means you purchase your preferred crypto asset, store it in your wallet and do nothing from there. )
- TIME ( You don’t need to stand in front of your PC all day long like traders do)
- BIG RETURNS (Although all cryptocurrencies are highly volatile, most of them generally have an increasing value over time. )
- LESS STRESSFUL ( Watching the price go up and down may become a really obsessive and stressful thing , so it’s better to check once in a while if you made some good profits)
Even if HODL started as a typo years ago its effect on the cryptocurrency market has been immense.
Although it may have its own set of disadvantages, just as everything does, it may still be a viable strategy.
There are thousands of people thinking that HODLing is the best strategy as there are thousands of other people who think the opposite. There is no right answer to which method is better, since today we speak for ”lucky” investors that were hodling Bitcoin since 2013 or even earlier and on the other hand there are plenty of investors that are doing short term trading and they have the same success as hodlers.