To HODL or not to HODL. That is the question!
In light of the recent market sell-off there’s been a lot of debate about whether or not the HODL method is a smart idea. More and more crypto investors are starting to adhere to the mindset that hodling is for suckers.
-There are two main camps-
CAMP #1 HODLING IS FOR SUCKERS
One camp has the opinion that by hodling you will eventually give back all of your gains. They believe in protecting your gains. To do so you must sell high, wait for a pullback and buy back lower. Traders too would argue that much more money can be made by coming in and out of a coin. Pointing to TA (technical analysis) such as charting and pattern analysis as the savvy way to go.
CAMP #2 HODLING IS FOR BELIEVERS
The other camp feels strongly that hodling is the only way to go. You’ll hear them say things like, “Don’t let someone else get your coins for cheap!” Or “I’m not selling until this reaches the moon!”. They feel that by selling you are giving into the FUD and playing into the hands of the powers to be, all entities against cryptocurrency.
If you do a search of hashtag #hodl on any social media platform, you'll find 100s of differing opinions. With so many opinions out there, is there truly a way to know which method works best?
WHICH ONE THEN?
No one can argue that when a market’s declining, hodling onto your coins only to give back all of your gains, is never fun. So that’s the answer you say, hodling’s just a bad idea, right? Well, unfortunately, it’s not that cut and dry. See even though hodling can seem like a bad idea it actually provides an investor with several very important things.
One thing is it allows the hodler to build real CONVICTION. Recently I talked in great detail about why having conviction is so important to investing.
Another valuable thing hodling does is it takes extreme emotions out of play. In a declining market, when you make a decision to batten down the hatches and ride out the storm, you’re limiting your options as to what needs to be done. By doing this you are inadvertently limiting your emotions. You’re not watching the chart second by second wondering if its time to buy back in. Then when buy back in, wondering when you need to get out. This can be mentally exhausting.
Lastly, hodling stops you from focussing solely on the coins price. Once you get consumed by the price you forget the reason why you bought into the coin in the first place. Though the price is important to us, we never want to buy or sell a coin based on price alone.
THEN I SHOULD HODL, RIGHT?
This is where it comes down to our conviction. The only time I would ever suggest anyone hodl a coin during a correction, is if they truly believe in that coin, its value, and its future. If you truly believe in those 3 things then why would you sell? If you were to sell something that you believe will be much higher in the future then you’re trading against yourself. Even worse you are assuming you know where the market is going in the short term. That’s a sure fire way to get yourself into real trouble.
In my next article, we’ll discuss why it’s impossible to know where this market is going in the short term……
HODL, of course!