Back in 2017, when the cryptocurrency industry was only hitting the mainstream, it included a large number of newbie traders that were just getting familiar with both crypto and trading industry hence had no idea how to properly trade or invest on the market. Their main strategy was pretty simple – buy and hold. Since most of them weren’t the brightest minds in the world, they sometimes even made mistakes in the 4-letter word “hold” and typed it as “hodl”.
As we’ve already mentioned, hodling is nothing more than buying an asset and holding it until it reaches your take profit or “moon”. Usually, most crypto traders aim at 100% growth for an asset before actually selling it. Hodlers won’t sell their assets even if they drop by 99% as most small altcoins did back in 2018. While professional trading might be more profitable than the simple holding of an asset, that strategy has its advantages that might surprise you.
Why is holding profitable?
Holding in 90% of the case will be more profitable for you rather than constant trading or reinvesting. According to statistics, only 10% of traders make profits on the market and if you think that you are smarter than 90% of the market participants, there’s a great chance that you’re not. Hence it would be smarter to buy and hold an asset rather than constantly trade it.
Major cryptocurrencies from 2017 recovered in 2021 after losing around 80% of their value which means even if you bought it back in 2017 at the top and held it through the 2018-2019 period you would most likely end up in a great profit. But if you would buy at the top and sell at the bottom, you would just end up with a ridiculous 80% loss.
Due to the nature of the market, most financial assets grow and rarely end up in long-term downtrends and get delisted. That’s why you will most likely win by simply holding an asset rather than constantly trading it.
What coins to hold?
There are hundreds if not thousands of investment options on the market and choosing one crypto to hold is extremely complicated. But if you choose to hold cryptocurrency there are a couple of options that you just can’t miss.
There is no point in investing in crypto without holding Bitcoin since it’s one of the two assets that are being used by institutional investors. Whenever the crypto market is growing, Bitcoin receives the major part of investments.
Smart contract technology is the locomotive of the cryptocurrency industry that attracts millions of investors and developers. The technology allowed developers to create NFTs, ICOs, and the whole DeFi industry that functions on the foundation of the smart contract.
From the investment perspective, Ethereum remains one of the best options for individual investors since the majority of technologies presented in the industry are tied to Ethereum and constantly utilize its network. To use Ethereum, they have to pay fees and to pay fees they are obligated to buy Ethereum which became a great foundation for the price to go up.
Altcoins like Solana, DOGE, or Ripple are much riskier options to hold but at the same time, they can give you a higher ROI (Return of Investment). But to remain profitable by holding these coins you need to track the development activity and treat it as an investment to a company rather than buying a decentralized asset.
The best time to enter the market is always the retrace period like we’ve witnessed back in 2018. Try not to enter coins at the absolute top and do not sell after seeing a 10% correction. But most importantly: learn to take profits. Holding can be profitable only if you sell your assets after receiving a certain profit from it.