The Psychology of HODLing: Building Patience for Long Term Success

For years now the term “HODL” has been a mainstay within the DeFI Space and as popular it may be, the term has mixed reaction from enthusiast. While some devote countless hours to endear themselves with the concept, others are much more habituated with the fast paced world of trading within the DeFI Space. With this in mind, let us take a closer look behind the term “HODLing” and explore why you may want to consider it as your long term strategy?

The Psychology of HODLing

The term HODLing or simply “HODL” trace its origins from the very beginning of the DeFI Space with the misspelling of the word “HOLD” and became a phenomenon ever since. It is now a term frequently used to describe enthusiasts who played the long game with the Digital Assets they love hence the abbreviation “Hold On For Dear Life”. This is why it was popular during the early days as every enthusiast was still HODLing Bitcoin due to its unique concept and rarity in value.

Source: https://zipmex.com/learn/hodl-meaning/

Over the years this term “HODL” transformed into a more frequent word discussed within the DeFI Space but its concept was rarely applied. In the fast paced world of the Digital Asset where hundreds of projects are created every single day offering massive returns overnight, the word “HODL” sometimes loses its touch as the community chases for the next Bitcoin which will set their life up.

Bitcoin and the word “HODL” then becomes a marketing gimmick as some of these new projects came with a promise of a lifetime while disappearing into obscurity shortly after its rise. From Memecoins to NFT, every project within the DeFI Space promises great future for all its HODLers but only 1 in 10 have managed to stay longer than 1 year. HODLing obviously further lost its value with each of these projects failing as uncertainty grew.

People lose faith in the success of the DeFI Space over the long run and stick to short term gains instead as a way to grab on to the opportunity. Afterall HODLing is obviously a strategy that seems easy to say in conversations but requires plenty of effort and research from your end to get a grasp on. HODLing does not mean that you Hold onto every Digital Asset in the DeFI Space but it requires a strategy to be deployed at the right time for a successful result.

Strategy for a Successful HODL:

1. Picking the Right Asset: There are plenty of Digital Assets that are available and your task is to pick the right one for you. This could be because you resonate with their vision or because they are a part of a new trend, your job is to quiet the marketing noise and choose the right Digital Asset to HODL.
2. Uncover its Long Term Potential through the Fundamentals: Once you found the right Digital Asset for you, the next step is to dig down deep through the information provided such as the Website and White Paper. Your priority is to look for clues and sneak peek on their potential to thrive and succeed in the long run.
3. Getting it at the Right Time: The Last Step after you find the right Digital Assets with enormous potential is to seize the opportunity at the right time. There is a right and fair price for everything and your task is to find the right entry point that will yield the maximum result in the long term.

With this strategy in mind we can be rest assured that not only we picked the right asset and entered at the right time before the “To The Moon” phase. The advantage of applying this within the DeFI Space is that plenty of projects provide transparency through its whitepaper so we can understand the vision of the project. If the vision is not feasible or there is no white paper presented then we can somehow conclude that the project might not be worth your attention.

Flashing back to the year 2008 and the Bitcoin white paper offered a glimpse of the innovations behind these new digital assets. While some discounted it as not important, others took the time to study the whitepaper and get in early when Bitcoin was still in question of its value. The net result is over the long term, its potential begins to show and the value starts to follow suit as the market responds.

Early adopters of Bitcoin such as Erik Finman and Michael J Saylor knew its potential and continue to HODL despite the market conditions. This is the main psychology behind the term “HODL” which is to remain patient and stick to the right digital assets regardless of the market movements. The rise in value brings you a challenge to HODL on and be patient while the fall in value brings you a challenge to not panic and follow with your analysis.

This key aspect is important in the term “HODL” as success in whatever field it may be requires patient and perseverance to play the long game. The Right Digital Asset with enormous potential will have a value fitting for its capabilities overtime and all you gotta do is to wait until the right time to show up. Afterall the market in the Short Term is a sign of Supply and Demand but in the Long Term is a sign of its Capabilities and Potential.

This sentiment is what great investors such as Warren Buffett and Benjamin Graham hold on to in their way to succeed and HODLing can be your approach to navigate the vast DeFI Space. The question is with the enormous amount of short term temptation that is available within the industry, are you available to wait the long game for a sustainable growth?

Long Term Success > Short Term Gains

The phrase “Rome wasn’t built in a day” forms the perfect example to describe the term HODL as it brings opportunities for the right digital asset to grow over the long run. Playing the long game obviously also brings in challenges of things not working out in the time but if you picked the right digital asset, you are giving yourself and the project time to rectify the course over the years until its potential is realized.

Source: https://www.pinterest.com/pin/701013498247328803/

HODLing your Digital Assets also may bring in substantial benefits for you who might want to consider it, these advantages includes:

1. Maximizing Long Term Growth: The DeFI Space is a volatile industry when you see it on a daily chart but over the long term, it has grown substantially from its inception in the late 2000s. This is due to the fact that plenty of sentiments or economic activity can influence the market movements in the couple of months but it would not affect as much when you look to the long run. By HODLing for the Long Term, you are actively avoiding these fluctuations and maximizing your net growth.
2. Greater Peace of Mind: Every fluctuation within the value of your Digital Asset will always bring emotional triggers and uncertainty for you to lock in short term gains or minimize the downturns. When you pick the right asset with its potential, fluctuations may happen due to the demand and supply but its growth will always coincide with the potential and innovations laid out by the project. This is why when you truly believe in the potential of your favorite digital asset there is a greater peace of mind as short term fluctuations won’t affect you.
3. Reduce Cost: Cost within the DeFI Space may come in two forms with monetary cost and decision cost. Early adopters of Digital Assets such as Bitcoin, Ethereum or Solana clearly save a lot of their capital by just HODLing their assets and not getting affected by the market movements. The obvious part is they save on transaction fees that might get incurred for any trade made during the period but also saving the cost of making a wrong decision in case they missed on the right opportunity. This is why HODLing might be your preferred choice to save cost and net result in the long term.

All in All, HODLing remains to be an important term for everyone within the DeFI Space as it gives the community a sense of belief in the future of this industry. It is a term that is often misunderstood but dear by everyone who can firmly grasp its concept and pick the right digital assets. With the continuous amount of innovation and growth that is happening within the DeFI Space, it is important for all of us to take the time and do our research so you don’t miss the right opportunity at the right time. Keep the HODLing on!