Is the HODL method of crypto investing right for you?

Many crypto enthusiasts consider HODL as a strategy. HODL or ‘Hold on for Dear Life‘ basically means buy & never sell; regardless of the price increasing or decreasing. No doubt that It would have performed better than over-trading in most cases. But is it really worth staking everything on one big bet?

Nothing wrong in trusting your fundamental analysis of a coin, but what are the odds of it hitting the bull’s eye?

HODL is a strategy particularly popular among seasoned investors, who have accrued the coin at such an early stage that for them it’s a 100x or even a 1000x return. So the current drawdowns of 20-30% do not affect them much.
Not surprisingly this philosophy draws confidence from Big coin booms of the past led by Bitcoin. There are many other success stories too such as Ethereum, MATIC & SOLANA that support the theory.

But do these examples paint a true picture? Imagine someone buying BTC between the $30,000 to $50,000 mark with a HODL mindset.

Would you still call it a good decision or a blunder?

We are not trying to write off the credibility of HODL as a strategy. But clearly, this approach has serious flaws capable to wipe out one’s hard-earned money. Let’s take a closer look.

Any person who has deployed capital in the last 2 years with a HODL mindset in any cryptocurrency is at a huge loss as of writing this. The degree of loss varies in their purchase value of BTC. Only people who got in post-July 2022 would have some capital left.

The assumption that the value of a coin will skyrocket in N number of years, is a risky assumption to make esp. in the crypto ecosystem, which is highly speculative and volatile.

While all these arguments can be debated, there is something else that is worth paying attention to. Size of Investment. If we look closely, we will either find these HOLDers to be very small investors using their burn capital or investors who have a direct interest in the coin and are community members committed to the success of the coin. The last ones are the large whales, who will likely never sell.

These 3 categories of people are important to determine before taking the decision to HODL a particular coin.

In the meantime when HODL did not work, the Sypto Athena strategy gave the following returns