HODL is short for “hold on for dear life,” and it’s a popular term among crypto investors. Although it looks like a funny misspelling of the word “hold” — and some say that’s how it began — HODL is also related to the traditional buy-and-hold investment strategy as one way to cope with volatility.
HODL is one of many insider terms used in forums and articles for newcomers to cryptocurrency investing. Call it crypto lingo: Words like FUD, Moon, Sats, and HODL that originated as chat room slang have become standard terms that crypto investors need to know. But as HODL has gained traction in other market sectors, you’ll hear other investors use it, too.
Here’s how this term has become one of the industry’s most popular bits of cryptocurrency jargon — and, more importantly, how it might also help your investing strategy.
HODL Meaning
What does HODL stand for, and how does the phrase “hold on for dear life” play into the deeper HODL meaning? For many investors, it’s easier to understand HODL in the context of another familiar investing term: buy and hold.
For example, if you’re wondering whether to “hold stock,” you’re essentially talking about buy-and-hold strategies. Buy-and-hold investors purchase stocks and other securities intending to hold onto them long-term, regardless of market volatility.
The goal is to weather market ups and downs with an eye toward long-term gains, as history has shown that the stock market tends to trend upward (although past performance is no guarantee of future returns). Or, to put it another way: You want to HODL stock, not sell it if the market gets bumpy. This is a common tactic used by value investors.
But what does HODL mean when discussing cryptocurrencies? It can be one of two things.
First, the basic HODL meaning can apply to a buy-and-hold strategy when talking about Bitcoin or other cryptocurrencies. Again, the idea is to “hold on for dear life” rather than selling off cryptocurrency in a panic if volatility increases — which is a likely scenario in the crypto markets.
The second HODL meaning can refer to a specific type of cryptocurrency token called — what else? — HODL. HODL, or hold on for deer, is a community-driven token that operates on the Binance Smart Chain.
The Origin of HODL
The term HODL originated as a misspelling of the word “hold.” Ultimately, the acronym “hold on for dear life” was attached.
Here’s the story. On the fateful day of December 18, 2013, Bitcoin traders were on edge: In the last 24 hours, the price of Bitcoin (BTC) had fallen 39%, from $716 to $438. This was after a year-long bull run in which Bitcoin rose from $15 in January 2013 to over $1,100 in December 2013.
A trader with the username GameKyuubi (who later admitted to having had a whiskey or two), posted the following on a Bitcointalk forum:
“I AM HOLDING,” he began his memorable, drunken rant.
Despite the turmoil, GameKyuubi had decided to stop trying to time the markets and hold his Bitcoin from then on.
“WHY AM I HOLDING? I’LL TELL YOU WHY,” the rant 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 … Just like that and make a million bucks; sure, no problem, bro.”
Despite the confusing spellings, GameKyuubi voiced a common frustration among traders managing crypto price fluctuations. But GameKyuubi defended his HODL strategy.
“You only sell in a bear market if you are a good day trader or an illusioned noob. The people in between hold. In a zero-sum game like this, traders can only take your money if you sell.”
The crypto-verse went wild. HODL became an internet meme within the hour, and its use as a legitimate investing term spread from there.
So, what does the TL:DR version of the HODL mean? It came about as the result of a typo.
Hodl and Cryptocurrencies
As mentioned, HODL can mean one of two things when discussing cryptocurrencies. Investors may discuss a specific HODL strategy to gauge when to buy or sell crypto. Or they may be referring to the HODL token itself.
At the core of the HODL approach is the idea that crypto investors shouldn’t be trading based solely on short-term pricing moves. Instead, cryptocurrency investors should hold on to their coins or tokens, riding out periods of volatility as they come and go. Even though cryptocurrencies may dip, pricing still has the potential to rebound, making up for losses over time.
This is what happened with the June 2021 crypto market crash. Many Bitcoin investors saw their 2021 gains wiped out after the price dropped dramatically. Other cryptocurrencies, including Ethereum and Dogecoin, also charted sizable losses. But the down market proved temporary, as many crypto prices have inched back toward their pre-crash levels.
Crypto investors who cashed out during the crash may have netted substantial losses. But those who chose to HODL instead may be eventually rewarded with much higher pricing moves as the cryptocurrency market rebounds.
