One of the crypto apps you can come across in app store is an app called YouHodler. In this app you can hold and stake crypto coins like bitcoin and ethereum. You also can earn interest transforming fiat ot crypto to stable coinsz the app also offers possibility to get loans and a feature called multi HODL. In this blog I will focus on the multi hodl feature.
What is multi HODL exactly?
Multi HODL can be explained as multi Hold On For Dear Life. It means that you multiply your original investment to 2-25X the original amount. For instance you invest 1 bitcoin and you pick factor 10x 9 btc will be borrowed. You pay a fixed fee varying from 0.45% to 1%. You also pay 0.01% fee for each hour the trade is active. Then you have to predict if the cryptocoin goes either up or down. The stop loss and take profit are dependent on the factor you choose. In order to make a profit your yield needs to be more than the applied fees. In case the price hit the stop loss you pay the margin fee of .9%. You have the risk of losing your investment if you hit stop loss. You cannot lose more than the start amount.
What are the benefits and disadvantages?
When you pick the right direction and there is a big bull market or big bear market you can multiply your profits easily, but the issue is that markets are not so easy to to predict. Not only can sentiments change fast it can suddenly go to opposite direction of your prediction. Also the fee is a fixed costs so if markets have low volatility the fee needs to be paid after finish. Without an exit strategy it is easy to make big losses. Another disadvantage is that you need to understand how this instrument works and never use any money you can afford to lose like with any investment.
get rich quick or not so fast?
As stated above it’s a complex instrument that should be considered with precautions. For beginners who just start investing in crypto it is best to stay away from this instrument. Markets are complex to predict and beginner will likely lose all money invested in this instrument. Unless you know what you are doing this instrument will cause losses. Also you need to have enough capital available to start multiple trades to hedge against a bad trade to make this instrument work. So for advanced users this instrument is a good addition in the portfolio.
Multi trades have a stay in the crypto world but everyone should evaluate first if this instrument is suitable for you. It can be a great tool for bigger investors and experienced crypto investors but for small investors bitcoin and stable coins are a better option. There is a lot of risk involved with the multi HODL.