‘HODL': A Typo Takes Hold as a Sound Cryptocurrency Strategy

Late in 2013, with bitcoin prices in the middle of a steep dip, a post appeared in an online forum featuring a misspelling that would become legendary: “I AM HODLING.”

The mangling of the word “hold” captured a kind of irreverent blind faith of some early cryptocurrency adopters, and it has since become a part of the lexicon of digital assets.

But “HODL” is more than just a meme. According to financial planners and analysts, it’s also a rational response to a market whose ups and downs are exceedingly difficult to predict.

“The holding part of it is important because it’s a nascent industry, and as a retail investor you are not well-equipped to be able to capture the volatility and to trade the assets,” says Theresa Morrison, a certified financial planner in Tucson, Arizona.

Indeed, the original HODLer in 2013 had no illusions about their ability to play the market. But the post conveyed a confidence that time would improve bitcoin’s fortunes.

“WHY AM I HOLDING? I’LL TELL YOU WHY,” their message read (this time spelling “hold” correctly). “It’s because I’m a bad trader and I KNOW I’M A BAD TRADER.”

A TIME-TESTED STRATEGY, WITH LIMITATIONS

The utility of HODLing, like any investment strategy, has its limits. Even a long-term cryptocurrency investor would be well-served to articulate clear goals and to monitor the emerging space for systemic risks.