Mastering HODLing: long-term Crypto trading strategies and Top brokers
HODLing, or long-term holding of cryptocurrency, is a strategy where investors buy and hold digital assets for extended periods, regardless of market volatility. This approach requires a strong belief in the potential of crypto assets over time and a willingness to ride out market fluctuations. In this article, we’ll explore key HODLing strategies, how to trade with this approach, and which brokers are best suited for long-term crypto investment. Whether you’re just starting out or refining your strategy, this guide will help you navigate the world of HODLing.
❗ Looking for the best FX brokers for breakout trading? Just scroll down or check out our list of trusted brokers.
What is HODLing?
HODLing, derived from a misspelled version of the word “hold,” refers to the strategy of buying cryptocurrency and holding onto it for the long term, even in the face of market volatility. It became popular during the early days of Bitcoin‘s rise in value, where investors saw huge potential in the asset and chose to hold rather than trade. The philosophy behind HODLing is based on the belief that, despite short-term fluctuations, the value of the cryptocurrency will rise substantially over time.
Unlike other trading strategies, such as day trading or swing trading, HODLing focuses on long-term gains and ignores short-term price movements. For HODLers, it’s less about the day-to-day price changes and more about the future potential of the cryptocurrency market.
How HODLing works
The basic principle of HODLing is simple: buy and hold. However, a profitable HODLing strategy requires patience and an understanding of market dynamics. Here’s how it typically works:
-
Research: A potential HODLer does thorough research on a cryptocurrency to determine its long-term potential. This includes understanding its use case, technology, and the team behind the project.
-
Purchase: After identifying a promising cryptocurrency, the HODLer buys the asset, usually during a period of market correction or at a relatively low price.
-
Hold: The key part of HODLing is to resist the urge to sell when the market experiences volatility or downturns. Instead, HODLers believe that the asset will eventually rise in value over the long term.
-
Exit (optional): HODLers may decide to sell their assets after they have achieved a certain level of value or after the cryptocurrency has reached a price target, but this is typically done only when the long-term potential is realized.
HODLing examples
-
Bitcoin (BTC): Bitcoin is the most prominent example of a cryptocurrency that has rewarded HODLers over time. In 2010, Bitcoin was worth less than $1, and today it’s valued in the thousands of dollars. Many early investors HODLed their Bitcoin through massive price swings, believing in its future growth, and have seen massive returns. For instance, Bitcoin’s price fell to $3,000 in 2018 before rising again to over $60,000 in 2021.
-
Ethereum (ETH): Ethereum, the second-largest cryptocurrency by market capitalization, has also been a popular asset for HODLing. Launched in 2015 at a price of under $1, Ethereum has seen significant growth, with its price reaching over $4,000 in 2021. Investors who held through the fluctuations have seen large returns on their investments.
-
Ripple (XRP): Although Ripple has faced regulatory issues, HODLers who believed in the project’s long-term vision have continued to hold their XRP tokens. Despite legal hurdles, the price of XRP has seen a rise, benefiting long-term investors.
Key technical indicators for HODLing
While HODLing is primarily a long-term strategy, it can still benefit from technical analysis, particularly in identifying the best times to buy or evaluate the market’s overall trends. Here are some key indicators that can be useful:
-
Moving Averages (MA):
- 50-day and 200-day MAs: These are essential indicators for determining the long-term trend of a cryptocurrency. A “Golden Cross” occurs when the 50-day MA crosses above the 200-day MA, signaling a potential upward trend. A “Death Cross,” where the 50-day MA crosses below the 200-day MA, can signal a bearish trend.
- Moving averages help HODLers spot when to enter a market during a correction or identify if the market is in a longer-term downtrend.
-
Relative Strength Index (RSI):
- The RSI is a momentum oscillator that ranges from 0 to 100 and is used to identify overbought or oversold conditions. An RSI above 70 indicates that a cryptocurrency might be overbought (and due for a pullback), while an RSI below 30 suggests that it may be oversold (and could be an opportunity for HODLing). HODLers can use this to decide when to buy during market corrections or dips.
-
Volume:
- Volume plays a crucial role in understanding the strength behind a price move. For long-term holding, a significant increase in trading volume can signal increased interest or a shift in sentiment. A sudden drop in volume may indicate a lack of market conviction, and HODLers can use this as a sign to hold their position or adjust their strategy.
-
Bollinger Bands (BB):
- Bollinger Bands are used to measure market volatility. When the price moves outside the bands, it could indicate an overbought or oversold condition. For HODLers, using BB can help identify whether the cryptocurrency is experiencing extreme volatility, signaling a potential buying or holding opportunity.
Real case study: Bitcoin HODLing in action
Let’s take a look at Bitcoin’s price journey as a real-life case study for HODLing. In 2017, Bitcoin’s price soared from around $1,000 to nearly $20,000, only to crash back down to under $4,000 in 2018. Many traders panic-sold during this period, but those who held on through the drop saw Bitcoin’s price rise again to new all-time highs in 2021. By holding, these HODLers avoided the emotional pitfalls of market volatility and capitalized on Bitcoin’s long-term growth.
During the crash of 2018, the market sentiment was overwhelmingly negative, and many predicted that Bitcoin was finished. However, the HODLers who trusted their research and the long-term potential of the cryptocurrency market were ultimately rewarded when Bitcoin surged to over $60,000 in 2021.
The best brokers for HODLing
While HODLing is a long-term strategy, it’s important to choose the right broker that supports this approach. Here are a few brokers that offer features ideal for HODLing:
HF Markets HODLing
HF Markets: HF Markets is known for its reliability and security, which makes it a great option for long-term crypto holding. They offer a wide range of cryptocurrencies, excellent customer support, and strong security protocols. The platform is user-friendly for those who prefer a set-it-and-forget-it approach to trading.
Avarade HODLing
AvaTrade: AvaTrade offers access to a range of cryptocurrencies and has features that are suitable for both beginners and experienced traders. They also offer demo accounts, so you can practice your HODLing strategy without financial risk.
XTB HODLing
XTB: XTB is another reputable broker that offers cryptocurrency trading, providing advanced tools for analyzing the market. While the platform is more tailored to active traders, it’s still a solid choice for HODLers who want to track their long-term investments with the help of detailed technical analysis.
Exness HODLing
Exness: Exness provides robust platforms that allow for secure crypto trading with advanced features. For long-term investors, Exness offers lower spreads and no hidden fees, which can be beneficial when holding positions for extended periods.
eToro HODLing
eToro: eToro is another platform that’s ideal for HODLing. It allows for easy cryptocurrency purchases and offers a copy trading feature, enabling investors to follow experienced traders. eToro’s wallet provides a secure way to store crypto assets, which is essential for long-term holding.
Risk disclaimer: eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
This communication is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. Past performance is not an indication of future results.
Copy Trading does not amount to investment advice. The value of your investments may go up or down. Your capital is at risk.
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro.
Related articles:
HODLing trading strategy - FAQ