What the Heck Is Hodl? Bitcoin Lingo for Crypto Noobs
(Bloomberg) -- Bitcoin’s been in the limelight for months but a frenzied crash and subsequent mini snap-back in its price in the course of a single day in May was remarkable even by its own volatile standards. The swings set Wall Street on edge, caused outages on major crypto exchanges and spurred angst among retail traders. Prices were buttressed by proclamations of support from digital-asset megafans like Elon Musk, the chief executive of Tesla Inc., and Cathie Wood of Ark Investment Management. Through it all, the hashtags #cryptotrading and #HODLing trended on Twitter and on search engines.
So what does HODLing connotate? What’s FUD? Or, if you’re not sure what a debate between “hodlers” and “weak hands” means, or have forgotten, here’s a guide or refresher:
It’s a popular mantra -- as seen on Reddit and Twitter posts -- that roughly means bullish gumption, or a call to hold tight to an investment even during a plunge in prices or an onslaught of headwinds. Traders will frequently use diamond and hand emoji in conjunction when posting about it online.
The fear of missing out is a powerful force in all markets, but is especially potent in a field where there’s no such thing as fundamental value. Crypto fans often cite FOMO as one of the reasons investors might buy cryptocurrencies when they’re in the midst of a rally.
Fear, uncertainty and doubt. Another term used in other investing contexts, it was adopted by the crypto community to denounce what supporters see as the intentional spread of misinformation. Skeptics see it used as a way to brush off anything negative.
This is sometimes referred to as halvening -- a planned reduction in rewards miners receive (the term is mentioned in Bitcoin’s code). Halvings happen once every four years or so -- more precisely, every 210,000 blocks of transactions. As the name suggests, each one cuts the amount of Bitcoin miners receive per block reward in half. The practice serves to maintain scarcity. This year, Bitcoin’s halving was followed by a steady rise in its price over the subsequent weeks.
“Hold” as misspelled by a frenzied Bitcoin trader on an online forum in 2013. It’s become the mantra of cryptocurrency believers during market routs, meant to reassure nervous traders that they should ride out any given slump because of what they see is Bitcoin’s long-run advantages. Anyone willing to stomach the volatility is thought to be hodling.
This phrase is used to describe cryptocurrency newbies who, instead of hodling, nervously panic-sell their coins in response to market jitters or negative headlines that wouldn’t faze experienced traders. Some weak hands bail out of Bitcoin in favor of so-called alt coins, cryptocurrencies other than Bitcoin. There are more than 9,000 digital tokens, according to CoinMarketCap.com. Many tend to take their cues from Bitcoin, oftentimes rising or falling in tandem.
In a wide range of markets, whales are investors whose holdings are so large that their every trade makes waves. It’s a term that comes with a suspicion of market manipulation. So, too with Bitcoin whales, or people who hold a lot of Bitcoin. Some estimates show just a handful control a large percentage of the market, so they have the power to move prices. About 2% of the anonymous ownership accounts that can be tracked on the cryptocurrency’s blockchain control 95% of the digital asset, according to researcher Flipside Crypto.
The Reference Shelf
- Bloomberg QuickTakes on Bitcoin and blockchain, on its foray into the mainstream, on Bitcoin halving and on the 2017-18 Bitcoin boom and bust.
- Are cryptocurrencies the future of money?
- A thorough look at why central bankers got serious about digital cash and how China is closing in on its own digital currency.
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