HODL Vs. TRADE - Which Strategy Is the Best?

HODL Vs. TRADE - Which Strategy Is The Best?

By Cryptofab | Cointune | 23 Jun 2022

Let's start with some quick definitions:

  • HODL: Hold On for Dear Life. This term was invented by Michael Lewis. Although it can be applied to any crypto, it was initially invented for the first holders of Bitcoin (BTC). The maximalists think that BTC will replace fiat currencies one day. So it would be useless to trade your coins, since at the end of the day they would replace fiat currencies, and their value would have increased significantly in the meantime. If you do not believe in this vision, you know that you will have to sell your coins one day. You may think you are a HODLer, but in reality you are just a temporary one, waiting for an opportunity to exit. That's the point. If you do not think cryptos will replace fiat currencies, you need to stick to the plan, which is to exit once it has sufficiently increased. Did you do that or have you finally kept all your cryptos because you started to believe in the HODL thing?...
  • TRADE: it means you follow crypto price evolution and buy or sell at the right time. It takes years to be a good trader. Most of the small investors think they are good traders when the market is bullish and discover they are poor ones when it turns bearish. There are several rules to respect: 1) Do not believe what the people say or write on YouTube or Twitter; 2) Manage your emotions; 3) Never buy when the market looks too bullish; 4) Sell when it looks too bullish; 5) Never think we have reached the bottom too early... It takes time. Even if you respect all these rules, you will still not be a good trader. On top of that, even if you try not too believe in what the people say or write, you will be influenced by crypto ecosystem, and you will start to think that Vitalik is a genius and that Ethereum (ETH) will revolutionize the world, and that 3k$ or 4k$ per coin is finally not that much to be part of this revolution... Most of you know what I mean. That's not trading. In trading, you must forget all these concepts and concentrate on technical analysis (e.g., RSI, MACD, moving average), real buy/sell volumes and sell when it has increased too much. If you are scared by the FOMO effect (Fear Of Missing Out), just think pragmatically that some people won a lot in casino, but statistically most of them lost.

So, what to do?

Last year some articles showed that HODLers were the big winners, but it was last year. This year the same people say: if you have HODLed since 2020 or sooner, then you are still a winner... Which means that most of the guys who bought in 2021 lost money, or potentially lost it if they have not sold yet. Therefore, if you have not sold in the meantime because you thought you were a HODLer, you just need to be patient now. CZ, the boss of Binance and inventor of Binance Coin (BNB), recently said that it will take BTC between a few months and two years to reach its current ATH of nearly $70,000, and that big cryptocurrency projects will survive the bear market, while small ones could be "in trouble". Therefore, if you have diversified a bit too much, you can at least swap your small cryptos for bigger ones which also provide staking rewards - e.g., Proof-Of-Stake coins like Solana (SOL) or Cosmos (ATOM). These are only examples, please DYOR. It might also be worthwhile to start using dapps (decentralized applications) on Ethereum layer-2 chains such as Arbitrum or ZK (Zero Knowledge) rollups since some of them plan to airdrop their future tokens, like it recently happened on Optimism with OP token.

Please find below a few links to earn a few coins...

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