Is "hodl" always a good strategy?

First, we need to define what HODL means: HODL stands for Hold On for Dear Life. The term originated from a 2013 forum post written by Gamekyuubi, who titled his post “I AM HODLING” instead of “I am holding”. In short, it was just a typo. The term became famous and used to title a book on cryptos from Michael Lewis. Since that, HODL is like a tagline everytime the bears take control, to urge the crypto holders, i.e., HODLERs, not to sell their coins. However, is HODL always a good strategy?

What are the possible crypto strategies?

There are two major options, and in each options some sub-options:

• Option 1: trading
  • Sub-option 1a: day trading
  • Sub-option 1b: long trading
  • Sub-option 1c: short trading
• Option 2: HODLing
  • Sub-option 1a: just HODLing
  • Sub-option 1b: staking
  • Sub-option 1c: farming

What is the most profitable strategy according to data?

According to the latest report from Glassnode:

As a gauge of just how underwater Short-Term Holders (<155-day) are, we can calculate the STH Realized Price (aggregate cost basis) by dividing price by the STH-MVRV Ratio (result in blue). This indicates that STHs have an average on-chain cost basis of which at the time of writing (BTC price $38.1k) is an average unrealized loss of -19.3%.

Another figure given by Glassnode in a previous report was that 73% of traders support losses, whereas above 99% of HODLers were above buying price.

Therefore, in the long-term, HODLing is the most profitable strategy.

Does HODL mean that you cannot do anything else than waiting?

HODL covers various sub-strategies, as mentioned, such as staking and farming. However, BTC cannot be staked or farmed as is. It requires to use some wrapped versions of BTC on various blockchains, or to swap it for altcoins which can be staked or farmed. While the most well-known farms are on Ethereum, Polygon, BINANCE Smart Chain or Fantom, it is worth looking at some alternatives like Tezos - see my previous article on Youves protocol, which offer higher farming rewards in some cases. Regarding staking, it requires to exchange BTC for a Proof-Of-Stake coin... Like EGLD for instance.

Disclaimer: None of the above-mentioned projects, protocols, coins or tokens are financial advices. Please Do Your Own Research before investing.

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