The term originated as a typo in a 2013 post on a Bitcointalk forum post. A user lamented his poor short-term trading skills, stating he was “HODLING” his Bitcoin. The phrase became a meme within a few hours and has persisted over the past decade.
While the term HODL originally applied to Bitcoin investing, it is now used across the digital asset space. It also holds various contexts within the crypto ecosystem – it’s an investment strategy, a mentality for crypto investors, and even a rallying cry among enthusiasts when expressing support for a particular currency.
Crypto HODLers believe that buying and holding their coins indefinitely will pay off in the long-term, riding out the price fluctuations of the famously volatile crypto market. This strategy has sometimes paid off, with leading cryptocurrencies like bitcoin and ether increasing considerably in value over time, while other HODLers have incurred losses by holding other cryptocurrencies into severe price declines.
Although not how the term originated, HODL is often referred to as a backronym for “hold on for dear life,” a phrase that aptly captures the feeling of holding and investing in a volatile market.
HODL origin
In December 2013, a Bitcointalk user named “GameKyuubi” wrote a post on the popular crypto forum. Bitcointalk was originally created by Satoshi Nakamoto and served as the main communication site for Bitcoin in its early stages. Many of the first technical and cultural cryptocurrency events, including Bitcoin Pizza Day and the Blocksize War, involved significant discussion and debate on Bitcointalk.
GameKyuubi created a post titled “I AM HODLING” in which he defended his buy-and-hold strategy (and also acknowledged that he had drunk some whiskey prior to writing the post). He noted: “WHY AM I HOLDING? I'LL TELL YOU WHY. It's because I'm a bad trader and I KNOW I'M A BAD TRADER… 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.”
GameKyuubi was referring to the many beginner traders who lack the technical knowledge to play the market and lost money in short-term trades. He acknowledges being a “bad trader,” saying that he will hold onto his bitcoin instead of trying to predict the currency’s price swings. He also indicated that he was aware of the typo in the post title but was too drunk to change it.
The post quickly gained popularity on the forum and the term caught on. Early memes included a scene from Fight Club saying, “The first rule of Bitcoin is you never sell Bitcoin” and a riff on the Nike logo stating, “Just HODL It.”
HODL Philosophy
HODLers believe that holding onto to their crypto will be beneficial in the long-term. They tend to not sell when prices dip or cash out when prices rise. The strategy was born in response to the unpredictability of the cryptocurrency market. In December 2013 when GameKyuubi wrote the post, the price of Bitcoin had increased to $950 after being valued at $130 in April.
Some crypto purists believe that digital assets will eventually replace fiat currency entirely, so holding onto their coins is advantageous.
HODLing has historically paid off for long-term bitcoin investors. Established coins such as bitcoin and ether are seen as more proven cryptos and have often provided investors with a positive return on investment. However, other currencies have either failed or incurred significant losses for investors that have HODLed the currency.
Focusing on a long-term investment strategy by holding onto assets is not unique to the cryptocurrency market; the approach is seen frequently in the traditional finance world. Warren Buffett, the billionaire chairperson of Berkshire Hathaway, is known for finding undervalued companies with strong potential and investing in them long-term (or HODLing them). Index investors also buy-and-hold their investments instead of actively trading.
Cryptocurrency as a medium of exchange vs store of value
Many early users foresaw that Bitcoin would be used as a means of exchange to pay for goods and services through its low-cost, peer-to-peer, government-free, global transactions. However, in recent years, more users and investors have begun seeing the asset as a store of value where users hold onto their coins in the hope that the asset will be worth the same or more over time.
HODL as a call for support
HODL is a rallying cry in popular culture to signal support for a particular currency, or the digital asset space in general. It is especially used when the price of a currency drops, signaling to other investors that a person intends to hold their coins instead of selling them. It’s also used to fortify resistance during significant swings in the crypto market, as another way of saying “stay strong” or “hold true to the mission.”
HODL essentials
- HODL started as a typo in a 2013 Bitcoin forum blog post; the term caught on and has been used consistently in the last decade.
- HODL refers to an investment strategy where users hold on to their crypto amid market fluctuations. It eventually became a backronym for “hold on for dear life”.
- HODL also serves as a term of support for a particular currency and as a rallying cry among crypto enthusiasts.