Is HODL a good strategy for salvation?

CoinDesk recently invited Thomas Braziel, who is the founder of the investment firm: 507 Capital, to the program about cryptocurrency titled "First Mover". He talked about the bankrupt crypto lender Celsius Network and commented that if the price of bitcoin were to rise, it could be a salvation to the estate.

Mr. Braziel suggested on the program that a forced “HODL” may be a good thing to confront the issue. Now the uprising question: Is HODL a good strategy for salvation?

What Does “HODL” mean?

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“HODL” is a very popular term as an investment strategy in the crypto-investment communities specially used for Bitcoin. It was first derived from the misspelling of "HOLD", but the newly generated term got popularity among crypto enthusiasts due to the interesting background story behind it. Now the term HODL is considered the short form of: "holding on for dear life" which indicates the buy-and-hold strategy among cryptocurrency investors.

The Background Story of “HODL”:

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In 2013 Bitcoin was high-volatile in nature when the price boomed 7,233% from January ($15) to the beginning of December ($1,100). But the central bank of China banned third-party payment companies from working with Bitcoin exchanges that causing the price to fall again to $438 in mid-December. In a Bitcoin Forum, a forum member wrote a post titled: “I AM HODLING” on 18 December 2013. He mentioned “HODLING” as a misspelling of “HOLDING”. The misspelled upper cases expressed the firmness of the simple holding strategy of the forum member.

Then the term “HODL” became the talk of the forum quickly and spread to other cryptocurrency communities. From that time, Cryptocurrency investors use the term “HODL” to refer to the strategy of buying-and-holding assets for a long period of time.

Why do investors “HODL” Cryptocurrencies?

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Cryptocurrency is the blockchain-backed decentralized digital currency that can be used as a medium of exchange and holding assets or investments. The interesting feature of cryptocurrency is not to be issued and controlled by any central monetary authority like the central bank.

As the cryptocurrency is self-regulated or regulated by the invisible hand of the market (Adam Smith termed the market forces as the ‘invisible hand’), the HODL strategy instigates the investors to hold their currency for an extended period of time aimed at the long-term value appreciation. It can ward off the short-term volatility of cryptocurrencies and ensures more safety for the investors by mitigating the risk of buying at a higher price but selling at a lower price.

Are there any risks of “HODLING” Cryptocurrencies?

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In the HODL strategy, the investors have to imbibe much higher risk by holding cryptocurrencies than the investors of conventional investment instruments. Because they can go through extreme ups and downs of values due to the volatile nature of the cryptocurrencies. They have to be capable enough in capital investment not to unwillingly sell in the case of a liquidity crisis.

If the investors can ensure their capability, HODL may be a good strategy as the salvation for Celsius Network-like lenders.

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