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What does HODL mean? 7 strategies to maximize profits when HODL coins

Many investors believe that the key to successful cryptocurrency investing is to buy and hold onto coins for the long term, regardless of market conditions. This strategy is often referred to as "HODL".
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lochoang
11 min read
Published Sep 30 2021
Updated May 28 2024
what is hold coin

What does HODL mean in Crypto?

HODL is a popular cryptocurrency acronym that stands for "HOLD". In the crypto world, it means to keep your cryptocurrency investment even when the price drops. On the other hand, some people also define that HODL is short for “hold on for dear life”.

It's a passive form of investing where you're not actively trading cryptocurrencies or trying to time market movements. Instead, you buy and hold your coins so that they will increase in value over time.

Many people believe HODLing can result in greater long-term profits than trying to make money by buying low and selling high. Some investors also use HODL as a joke about their strong belief in holding on to their digital currencies no matter what happens. If you want to learn more about this concept and how it works, scroll down!

GameKyuubi, one of the most popular users in the Bitcointalk community, summed up the HODL philosophy perfectly:

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hodl mean
GameKyuubi explained what does HODL mean

The difference between HODLing and trading

hodl and trading
HODL and Trade have its own advantages and disadvantages

A trader is someone who buys and sells assets frequently, in an attempt to make profits from short-term movements in prices.

A holder, on the other hand, is someone who buys assets and holds onto them for a long period of time, in hopes of making profits from the asset's appreciation in value over time.

There are several key differences between traders and holders when it comes to investing in assets.

Firstly, traders tend to focus on short-term price movements, whereas holders typically care more about long-term price trends.
Secondly, traders typically employ more sophisticated investment strategies like technical analysis or leverage, which allow them to potentially maximize profits (or losses) compared to holders who may not have as much trading experience or knowledge of market dynamics.
Finally, traders may be more comfortable with risk and uncertainty than holders, who often prefer a more stable investment environment. Despite these differences, both traders and holders can be highly successful in their own rights, depending on their individual investment strategies and preferences.

When it’s the best time to HODL?

The main benefit of holding a cryptocurrency is that you can potentially profit from its appreciation in value.

For example, if you bought Bitcoin when it was first released in 2009, you would have made a significant profit by now as its value has increased significantly.

Another benefit of holding a cryptocurrency is that it can be used to pay for goods and services. Although not all businesses accept cryptocurrencies yet, there are an increasing number who are starting to. This means that you can use your cryptocurrency to buy things just like you would with regular currency.

Finally, holding a cryptocurrency can also give you a sense of ownership and control over your investment. Unlike stocks or other investments where you are at the mercy of the market, with cryptocurrencies, you can hold onto your investment and wait for the right time to sell.

This gives you a lot more control over your investment and allows you to make decisions based on your own personal circumstances.

How to find the best coins to HODL?

price history of bitcoin
Price History of Bitcoin. If you were a long-term holder from 2010, you would have gained over $700,000 for 1 BTC

At first glance, it can seem daunting to try and find the best coins for HODLing. However, there are several criteria that you can use to help guide your decision-making process.

One of the most important factors is the team behind the project - look at their previous experience with other projects, as well as how many users they have and how much trading volume they have on different exchanges. This will give you an idea of whether or not they have a strong foundation and community support behind them.
You should also pay attention to any major partnerships that the project has formed. With so many different cryptocurrencies and blockchain projects in the market, partnerships can be a very good indicator of future success.

At the end of the day, choosing which coins to HODL is a highly personal choice - there is no one-size-fits-all solution. However, by keeping these criteria in mind as you research your options, you can make an informed decision about which projects are worth investing your time and money in.

Of course, this is just a brief overview of some basic tips when it comes to finding the best coins for HODLing. There are many other factors that you may want to take into consideration as well - such as technical indicators like price trends or chart patterns, or more advanced strategies like algorithmic trading.

But no matter which coins you decide to hold, just make sure that you do your research and stay up-to-date on the latest news and developments in the crypto space. At the end of the day, it’s up to you to determine what’s best for your own portfolio - but these tips should help get you started.

7 strategies to maximize profits when HODL coins

There are 3 main ways to maximize profits when HODL coins: Staking, Lending and Yield Farming.

Staking is the activity of depositing your crypto assets on blockchains to earn passive income paid in crypto. This keeps the blockchain consensus running and enhances security. In this article, Coin98 will divide Staking into 4 strategies: CEX Staking, DEX Staking, Foundation Staking and IEO, IDO Staking.
Lending is an ingenious instrument to obtain the cash you need quickly, as it allows you to utilize your crypto holdings as security to get secure loans.
Yield Farming is is a strategy used by cryptocurrency investors to generate passive income from their investments. In this article, Coin98 will divide Yield Farming into 2 strategies: DEX Farming, Yield Aggregator Farming.

CEX Staking

cex staking
There are many options on centralized exchanges for locked staking

CEX staking in cryptocurrency is a process of holding funds in a centralized exchange account in order to receive rewards. This can be done with any currency but is most commonly done with Bitcoin.

In order to participate in CEX staking, users must first create an account on a supported exchange. Once the account is created and funded, the user can then begin participating in staking by selecting the currency they wish to hold and choosing to stake it.

Many centralized exchanges offer staking services including Binance, Coinbase, Kraken, and Bittrex. Some popular staking coins include Ethereum, TRX, C98...

CEX staking can be a great way to earn rewards on your cryptocurrency holdings. It is important to note that this process does come with some risks. As with any holding on an exchange, there is always the potential for loss due to hacks or other unforeseen events.

DEX Staking

DEX staking is a process where you can earn rewards for holding your cryptocurrency in a designated wallet on a decentralized exchange (DEX). The process is similar to CEX  staking, but with one key difference: instead of holding your coins on a centralized exchange, you hold them on a decentralized exchange.

This has a few advantages:

First, it's much more secure. Since your coins are stored on the blockchain itself, there's no risk of them being hacked or stolen from the exchange.
Second, it's more decentralized. By definition, DEXes are more decentralized than CEXes, so staking on a DEX is even more decentralized than staking on a CEX.
Finally, it's often more profitable. DEXes typically have lower fees than CEXes, so you can earn more rewards by staking on a DEX.

Many popular DEXes such as Uniswap, Pancakeswap or Pangolin offer staking opportunities to their users with high APYs. All you need to do is deposit your coins into the designated wallet and start earning rewards.

dex staking
Most of DEXes offer staking on their platforms

Foundation Staking

Foundation Staking is a process in which a person or organization stakes their cryptocurrency to support the development of a project or platform.

The most popular one is becoming a validator for a proof-of-stake (PoS) network. In return for staking their cryptocurrency, validators receive rewards in the form of newly minted coins or transaction fees.

Foundation staking can also refer to staking for other purposes such as governance or voting rights.

For example, some platforms allow users to vote on proposed changes to the protocol with their staked tokens.

Foundation staking typically requires locking up your tokens for a specific period of time, during which you cannot sell or trade them. This is done to align the interests of stakeholders with the long-term success of the project.

IEO, IDO Staking

IEOs and IDOs are both types of cryptocurrency crowdfunding. IEO stands for Initial Exchange Offering, while IDO stands for Initial DEX Offering. Both types of crowdfunding allow startups to raise capital by selling tokens to investors. However, there are some key differences between the two.

IEOs are conducted on a cryptocurrency exchange, whereas IDOs are conducted on a decentralized exchange (DEX). This means that IEOs are subject to the rules and regulations of the exchange, while IDOs are not.

Users have normally required to lock up or “stake” their tokens in order to participate in an IEO, IDO. This is done to ensure that users are committed to the project and will not sell their tokens immediately after the IEO, IDO.

Participating in IEO and IDO can be profitable for investors, as they can receive airdrops or bonuses. However, there is also a higher risk of losing money, as scams are more common in the world of cryptocurrency crowdfunding.

ieo ido staking
ATH ROI of projects on Binance Launchpad

Lending

Lending in cryptocurrency can be a great way to earn additional income. By lending your digital assets to others, you can collect interest on your investment and help grow the community. Here's how to get started:

To begin, you'll need to find a reputable lending platform that supports cryptocurrency. Once you've found a platform you trust, you can create an account and deposit your crypto funds.

Once your account is funded, you can start lending your digital assets to others in the community. You'll set your own terms and interest rates, and borrowers will repay their loans with interest over time.

Many lending platforms such as Aave offer additional features such as insurance and collateral to help reduce the risk of defaults.

aave is a defi
Aave is a DeFi lending protocol that lets users lend and borrow cryptocurrency

DEX Farming

DEX farming is a process of earning rewards by providing liquidity to a decentralized exchange (DEX). By adding your cryptocurrency tokens to a dex's pool of liquidity, you can earn fees from trades that are executed on the dex. In addition, some dexes offer additional rewards, such as airdrops or staking bonuses, for farmers who provide liquidity to their exchange.

DEX farming has become a popular way to earn rewards in the cryptocurrency community, as it offers a passive income stream and does not require users to trade their tokens. Furthermore, by providing liquidity to a dex, farmers can help to promote the use of decentralized exchanges and contribute to the growth of the cryptocurrency ecosystem.

Popular DEXes such as Uniswap, Pancakeswap, and Sushiswap have their own native token pools that farmers can provide liquidity to. These tokens can be farmed using either the hosted exchange's interface or a decentralized application (DApp) such as MetaMask, Coin98

dex farming
Yield Farming on PancakeSwap is easy

Yield Aggregator Farming

Yield aggregator farming is a type of farming where you stake your cryptocurrencies in multiple yield-bearing projects to maximize your returns. This strategy diversifies your risk and allows you to take advantage of different types of interest-earning opportunities.

Yield aggregator farming can be done manually by keeping track of different interest rates and transferring your funds accordingly. Or, you can use a yield aggregator tool that will automate the process for you.

With manual yield aggregator farming, you have more control over where your money is going. But, it requires more effort and diligence on your part. Automated tools can make the process simpler, but they may come with fees or require you to give up some control over your funds.

There are many yield aggregator platforms such as Yearn.finance, Compound, and Yield Yak. Each platform has its own advantages and disadvantages, so it's important to do your research before choosing one.

yield yak
Yield Yak is an easy-to-use tool to earn more yield from DeFi farming on the Avalanche network

Risks of HODL coins

Here are some risks when it comes to holding cryptocurrencies for a long time:

Losing the private key

If you lose your private key, there is no way to recover your cryptocurrency, which means that your coins will be lost forever. In addition, if someone steals your private keys or brute-forces it by running a lot of computations, they can steal all of your cryptocurrency.

For example, as we speak, a hacker has stolen over $80 million worth of cryptocurrency from Cryptopia because he got his hands on the company's private keys.

Price fluctuations

The price of cryptocurrencies such as Bitcoin and Ethereum can fluctuate wildly at any given time due to various factors like market conditions and government regulations.

This means that even if you hold onto these coins for a long time and refuse to sell them, their value could drop significantly and you would end up losing money.

Forks

Another risk when it comes to holding cryptocurrency forks. Forks occur when the underlying blockchain of a coin splits into two different chains. This can happen for a variety of reasons, but it usually happens because the community can't agree on something or there's a disagreement among the developers.

When this happens, holders of the currency will typically be given an equal amount of the new currency on the new chain. However, this doesn't always happen and it's not guaranteed. So, there's a chance that you could end up losing your coins if there's a fork and you don't receive any of the new currency.

These are just some of the risks involved in holding cryptocurrencies. As you can see, it's not as easy as it seems. However, there are ways to reduce or even eliminate these risks.

For example, you can use a hardware wallet like Trezor or Ledger to store your cryptocurrency. You could also set up multiple backups of your private keys and store them offline whenever possible so that you're still able to access your coins in case something happens to your computer.

Of course, none of these options are guaranteed, but they will generally help you mitigate potential losses from attacks or hacks.

Conclusion

HODLing can be a very effective strategy for making money in cryptocurrency, but only if you do it correctly. It requires a lot of research and knowledge about the cryptocurrency market.

I hope you enjoyed this subject. If you want to learn more about cryptocurrency, check out Coin98 Community for more interesting articles. Thanks for reading!