WHAT IS THE RIGHT WAY TO HODL?
Among the several ways to make profits from cryptocurrency is HODL ( Hold on for dear life) and many people have embraced it because it has been profitable. In this article, I want to share my views about HODL cryptos especially for a long-term purpose, but before I proceed, I want to state that the information you are about to read is my personal view and you are not bound to accept it. Ensure to do your research and feel free to criticize or affirm.
Let us start by considering these two scenarios;
Investor M bought Bitcoin in 2020 when the price of bitcoin was at $20,000 and held it till early March 2021 when the price of Bitcoin hit $60,000. He sold his Bitcoin and bought back the same quantity he sold with an amount lower than the amount he sold them for when the price of Bitcoin dropped to $40,000 and he is still hodl up till now. He used the remaining amount after buying back the earlier sold Bitcoin to invest in other crypto projects.
Investor N Bought the same amount of Bitcoin at the same time as Investor M. Because he believed in the future of Bitcoin, he refused to sell his Bitcoin even when Bitcoin reached an all-time high early this year. He is still hodl up till now.
Among these two individuals, who would you say is a good Hodler?. I will love to read your opinion in my comment section, but let me kick up the discussion.
Cryptocurrency is volatile and it is the volatility that makes it profitable, however, it is also a risk to be considered when dealing with crypto. It is good to be a good believer in a crypto project and to showcase your love for the project by hodl the project token for long, but should it prevent you from taking away profits when there is a need?.
NO, there is no guarantee that a project will continue in the uptrend direction for long, correction is certainly going to come in, thus there is a need to prepare for such correction.
In my case, I will certainly sell 50% of my Hodl when there is a huge pump in any project I believe in. The remaining 50% will be a countermeasure should the coin continue to rise. The 50% sell will enable me to buy back more than I sold should the price of the token dip.
Having an exit price doesn't necessarily make you a trader when you have Hodl in mind, it makes you a wise Hodler if you ask me 😏.
In conclusion, it is good to believe in the long-term Hodl of token but if we can see a huge ROI on the token, we should consider the volatile nature of the crypto market and make a decision that will bring profit to us while hoping for better days. As I said, this is just my opinion and you are not bound to accept it, DYOR.
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Sometimes selling for profit later turns out to be a bad deal.
I once made an amazing trade selling 100 ETH at $38. lol..
If only I knew then, what I know now! :)
No regrets that's the game. HODL is usually the best bet if the project is getting attention and active. Less active projects, take the money where you can and put it where there is attention!
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Wow. 100 Ether? . you could have been in huge profit had you not sold all of the Ethereum. But it happens though and we learn from mistakes.
Selling 50% in time of profit and buying back after correction is a good routine to adapt too. It's a better way to minimize loss and manage risk.
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I completely agree with you, on your hodling strategy... About the question investor M did the right stuff because if you over hodl the tendency of running a lost is inevitable in most occasion my taught.
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Interesting discussion!
I will like to say, it's a determinant of your strategy, if your strategy is long-term gains, buying during a dip and holding it till you make a profit is an option you can explore, you need to spell out how long you are holding a token or coin and you can do this by checking out what happened the previous year and use it to mark up you holding period, if it reaches the cut-off period you set, you can sell and buy back, just your strategy.