This guide is for all cryptocurrency investors, who intend to hold their cryptocurrencies or are already holding them. It outlines the “why” of buying to hold as opposed to alternative strategies, as well as the risks and rewards.
Starting with the Basics
Cryptocurrencies are what they are — encrypted digital currencies. They can be bought, sold, and transferred. Holding to buy crypto is like holding cash (or money). First, it is a way of storing your financial asset. When you “HODL” it, you are not spending it. From an investor ‘s perspective, holding to buy is the safest form of investment, and it is the cheapest.
When it comes to buying to hold, time is of the essence, as is determining the best entry point or entry price. For example, if you have invested $200 in Bitcoin in March 2011, when 1 BTC was worth $1, your investment would’ve been worth over $8.8 million by now. Likewise, if you had bought 1 BTC for $29,789 on July 20, 2021, it would have almost doubled on August 7 at $44,699.
Why Buying to Hold is the Best Strategy
Here are some of the reasons the “Buy and Hold” strategy remains effective in crypto investing.
There are No Technicalities
Unlike crypto trading where you must constantly monitor the market and implement risk–management techniques, like stop–loss and take–profit, you don’t have all that burden with the “Buy and Hold” strategy. All you need to do is to create a crypto wallet to store your cryptocurrencies and keep your private and public keys safe.
You Don’t Have to Worry About Timing
Crypto trading is fraught with you having to time the market — knowing when to enter and exit the market. Besides, cryptocurrencies rise and fluctuate, depending on market dynamics. Often, this raises concerns.
You Aren’t Bothered with New Entry Positions
Active crypto traders always lookout for new entry positions after closing previous trades. In most cases, potential entry points are not favourable, which means that you have to test several entry levels until you’ve found the right spot.
There’s Less Stress with Buying and Holding
Trading comes with stress and emotions, which influences each outcome. Not every crypto holder knows how to handle the challenges that come with it. Market changes call for new strategies and implementations. On the other hand, buying and holding your cryptocurrency saves you such challenges.
How to Improve Your “Buy and Hold” Strategy
Like any other investment, it is essential that you know your risk tolerance. HODLing works if you follow the right strategy:
Invest in What You Know
The fundamental goal of “Buying and Holding” is to achieve long–term growth. As an investor, you must be aware of how the cryptocurrency market is developing. It also applies to researching and understanding your chosen crypto economy’s underlying technologies and technological trends to improve the outcome of your investment.
Don’t Get Trapped in the Fad
Cryptocurrency holds a lot of promise. The potential for the crypto economy to become a legitimate financial system is substantial, and many people are betting on the success of this technology.
However, cryptocurrencies are still relatively new to the broader financial world. It is easy to get caught up in the buzz of which crypto is in vogue. Using this approach only makes you waste money on lost causes masked as golden eggs. Make your decisions based on the potential, not the hype.
In looking ahead, apart from buying to hold, you can also use profitable activities like gaming to boost your earnings and cashflow. BoliesTV organizes tournaments for gamers to go head-to-head playing FIFA, Fortnite and Madden, among others. The platform allows you to register for free, and you can then participate. You can surely earn with BoliesTV doing what you love.