[Disclaimer: This is not to be construed as financial advice]
HODL, or hold on for dear life, is term coined quite recently, if I’m not mistaken, by the crypto community. It appeared for the first time in a Bitcoin forum post in late 2013, and refers to the act of holding and accumulating cryptos, rather than trying to pick the tops and bottoms.
With the massive amounts of bullish momentum that we have seen over the past few months, it’s hard not to jump back on the bandwagon that crashed and burned a couple of years ago. Although this new bandwagon has brakes and a seatbelt, there are still certain things to be wary of. One of the contributing factors to the parabolic pullback we saw in December of 2017, was that of a lack of education. We saw FOMO buyers piling in, as the ICO or initial coin offering fad began rearing its ugly head. This massive increase in the amount of cryptos being launched drove an unhealthy amount of uneducated liquidity into the market and, when the institutions finally had what they wanted, they brought it all tumbling down.
Now, if you are like me, you are probably wondering how to get yourself a piece of all these tasty crypto pies. With so many to choose from, where do you start, and how can you be sure that your efforts will pay off?
First things first, stick to the majors! Yes, we may see triple digit percentage movements in some of the smaller altcoins, but in these infancy stages of industry 4.0 we need to tread lightly. The infrastructure developments and adoption of the majors far surpasses that of most of the other alts. At the end of the day, these are the two pillars every crypto relies on for success.
Secondly, I know you margin traders out there like to think you can pick a top or bottom, but you can’t. How many times have we thought “Ah, this is the bottom, load up those lots!” then – boom – the institutions have you exactly where they want you and blow through your stop losses. For those of you who aren’t margin traders or who don’t know what margin trading is, keep it that way. It’s dangerous, but dollar cost averaging isn’t.
Dollar cost averaging is the 9th wonder of the world, behind the 8th: compound interest. It is the process of investing consistently, and continually buying the tops, the bottoms, and the middle: essentially averaging your buying price over time and negating the volatility of the market.
From dollar cost averaging came HODL. If you are as passionate and confident in the industry as I am, you would have been beefing up your crypto portfolio at every opportunity while you hold on for dear life. Pick your favorites and hold onto them, buy responsibly and consistently, sit back, relax, and enjoy the show.
Finally, the crypto market is scary, it’s dark and it’s largely unexplored. Do your due diligence – don’t go pilling an entire year worth of savings into the market because you think the next all time high is nigh. The whales and the institutions are licking their lips at the moment – they know the money pouring into the market is largely retail and at the drop of the hat, when they decide to step in, that bandwagon of ours won’t be looking so safe.
SA Crypto encourages all readers to consult a professional and registered financial advisor before making any financial decisions.