HODL vs. Trading: A Few Points To Consider- Or, an Ode To The HODLer and A Suggestion For Bigger Bags - Part Two

By BitcoinGordon | BitcoinGordon | 11 May 2021


Continued.

Part of that plan needs to include buying the dip

There are several ways to buy the dip... we should say dips. There's gonna be a lot of them. This is crypto, after all.

If you HODL and have a strategy for adding to the bag, then do it religiously. I don't mean light a candle or gear up the yoga pants. I mean don't stop, and don't give in to the extra dinner's out. Don't splurge on the 1st anniversary gold bar edition of Tiger King because Bitcoin popped a $1K candle. Seriously, HODL if you're going to HODL, y'know? We make sacrifices. Make them worth it.

A few thoughts on the bag-building.

DCA, or Dollar Cost Averaging is one way to go. A lot of apps and exchanges are now even allowing users to automate some form of DCA or another. The idea with DCA is to consistently buy the asset at the current going rate. Over time, the cost will reach a statistical average that is reasonable and in keeping with long term gains. It is a good way to goal-set and exercise the discipline of HODLing. DCA can offer flexibility, and there are two main ways this can benefit you.

1) Flexibility in time

2) Flexibility in cost vs. price

The important thing about DCA is not to fall down on the job. Only under extreme financial strain should a person deviate from a serious investing regimen. Having said that, discipline can involve a complex and robust strategy, so having some flexibility and rules doesn't mean blowing the game. For instance, you can establish a range, where you are watching the price on a schedule. When it is lower than the average, you may DCA heavier, and go slightly lighter when it is at peaks, thus increasing the bag long term. You may want to watch the market and only invest when you see your asset drop by "x" percent or "x" fixed amounts. You can choose to DCA only during down trends at specific increments and all sorts of groovy patterns. The point is, use a strategy and stick with it.

Now, here's the real challenge. HODLers often have a prejudice against traders, thinking of them many times as "traitors"... as the enemy in a game of crypto cat and mouse. I've already written a great deal about how important liquidity is to an asset. The thing is, some trading can certainly be considered a part of a person's HODL plan. Investing does not have to go in only one direction. Trading does not, by definition, mean you only value the asset enough to get a little more dirty fiat. The fact of the matter is, though, accumulation has to be measured in something, somewhere, somehow. You aren't trading Bitcoin against Bitcoin, you know, right? If you buy Bitcoin your entire life in order to pass Bitcoin down to your children, and perhaps even them down to their children's children, I suppose like any truly valued treasure, one has to ask if owning it is the true gem, or if utilizing it in some way is the goal? There are numerous ways a person can put that crypto to use, and I discussed that lightly in my article about Saylor and the HODLer, but truth be told, what you wanna do with your treasure is your business, your decision, and I am simply here to suggest that if the goal is to hold and never ever ever let go, then perhaps part of that plan should be to accelerate the process when extremely overtly obvious benefits exist.

Last year, 2020, the year of 100% loss of 20/20 vision upon the entire global community, there was a fateful day where every asset dropped until it hit its absolute bottom. At a time where Bitcoin was already suffering a not-so-hot year 2019, it was $13,000 at its absolute strongest and finally fell all the way down to $3900. For the HODLer, I would imagine those who could, and still place food on the table in a scary time of uncertainty where countries that have the most people working for their paychecks held on to fiat for dear life, any HODLer who could bought on the way down, and certainly tried to acquire AT the bottom best they could. So, part of what I am saying, is that the reverse is also true. When Bitcoin hits some clear temporary peaks along the way, it makes a great deal of sense for the HODLer to sell, wait for the temporary drop, and acquire more.

I believe many HODLers see any kind of sell as betrayal of their loyalty to their coin(s) of choice. From what I view as a reasonable perspective, the more that one wishes to only store their wealth in a single asset they believe in with all of their might, the more they need to understand that it only grows in value compared to something else. Who knows in 5 years, 10 years, 20 years the world is ignoring ALL state-run CBDC's and only trading in the top 4 coins. Who knows? But, the likelihood is that 2020 gave us some insight, that the citizens of the world truly are going to roll over and 'take it' no matter what that 'it' is. The world is brainwashed beyond measure, and those who are contrarion to the state are easily, readily mocked, dismissed, truths manipulated and lies believed. So, the world on whole deserves the surveiling version of digital fiat that is coming by and large, and the question is only whether the big fat bankers lean on crypto hard enough to where they are now too big to fail in our neck of the woods in addition to their own?

The direction of 2021 says "YES" and so we have to make that good news for us. Legitimacy is coming for crypto, but only the top selected ahead of time, and a few outliers that are for idiots and billionaires who manipulate them.

If you learn a little about watching charts, you will be able to see whether a trend develops over days, weeks, months or years, where it makes good sense to take some profit and use it to your benefit. Did you ride Bitcoin from $10K to $20K? Good! You started with ugly dirty messy awful $10,000 of fiat and placed it into something you believed in, and look! You were right! It DID go up! So, sell at $20K, wait for it to go down to... what? What do the charts say? Are you looking to jump back in as fast as humanly possible, terrified that the bottom will never ever return and you will regret having ever left the loving embrace of your favorite ones and zero's? I promise you it is going to be okay. If you earned, in this example $10,000 in profit, the worst the tax hit would be in the U.S. for example, for anyone in the lower middle class is 15%, so you are up $8500. Wait until Bitcoin drops to, let's say $19,000, playing it incredible safe, and buy it all back. Did you just betray your original value at $10K? Many HODLers think so. They think that it makes them the fool for buying at $19K when they already had it at $10K. That is NOT how this works. The range between buy and sell truly is the only thing that matters as it relates to the asset you are investing. The truth is that you had $20K worth of Bitcoin, and now you can have $21K work of Bitcoin. That extra $1K will follow you into the next peak. You are increasing your momentum. In fact, it is not unreasonable to think that, when Bitcoin is truly worth $20K, it will be periodically spiking at $30K sometimes, but will drop just under $20K and then eventually average out to what it is worth. We live in a world that, once the steady inflow of bank capital and millionaire investors started buying up market price, Bitcoin essentially went from $13K to $50K.

It now essentially lives at $53K. It tries to break through $60K and move on upwards to the next levels of support, but it gets rejected anytime it passes the top. Until someone at the top says "go" it is going to hover around $53-57K. So, there have been probably 30 good opportunities now, for the average HODLer to acquire more of their asset. 

I can go on and on about this strategy and I probably will. No... I definitely will- hehe. The points I wish to drive home for you are that you need to define the purpose of the HODL. What makes it meaningful to you? What IS it for? Generational wealth? Freedom? Belief in a better form of money? Any of these things beg then, what it is going to be USED for. Will you ever want to use it as a payment for things? Seems to me that is a sure way to end up with less HODL at the end of the day. Is it to pass down to the next generation? Then, what are the instructions that go along? For some, it is the firm belief that the world will transact in that store of value, and you will have been prepared. But that still means at some point in time, the HODL will convert into a practical way to transact. Is that true? Does one express their true HODL values by only transacting in fiat, in order to never touch their store of value? Or, does it, in some ways, show that they don't fully grasp or believe in their store of value, if they don't think it acts as a better leverage for their current buying power?

I admit, it is a complex question and answer, and none of us fully know the right answer. Until transhumans fill the world and take the elite into posthumanism, life is fleeting for most. 30 years from now, again stipulated by the above, Michael Saylor will be retiring or sunsetting or will have passed as one of the early-20's hero's of the HODL. But, even Saylor is utilizing a strategy of leveraging his holdings to make use of more fiat. The goal is to make that fiat worth more to him, his company, in the short term, so that he can continue to own an increasingly larger percentage of the world's supply of Bitcoin.

This is one of many strategies that can work, should work, currently do work, and may continue to work in the future. At some point, the question is whether the wrong evil geniuses who decide the fate for all of us, are insulted by his individual success, or whether they embrace it. I dunno bc I don't operate on their level. I'm still down here with you guys in the trenches. I am a commoner's super hero for now, after all.

To HODL or not to HODL, that is no longer the question. Therefore, the only question left is how that HODL is meant to work for you, and whether it is worth taking an occasional profit in order to acquire more HODL? If yes, then you will find a lot of benefits from coming posts about exactly that. If it is simply too evil for your inclinations, that is perfectly fine. Read 'em anyway, you may either expand your vision for the HODL path, or at least strengthen your own case against an occasional trade.

And on that note, HODLnaut's unite against the evil's of centralized fiat debauchery, under the shadow of a crypto super hero... Gordon Freeman... for now... until next time... out.

 

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BitcoinGordon
BitcoinGordon

Hi! I'm Gordon Freeman (I hear they made a likeness of me in some video game... totally unrelated... or...).


BitcoinGordon
BitcoinGordon

Welcome! This is my blog for all things crypto, from my day trading and tutorials to general crypto news.

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