Can HODL go wrong? A Lesson to take From February Cryptocurrency Crash
cryptocurrency·@cryptoasis·
0.000 HBDCan HODL go wrong? A Lesson to take From February Cryptocurrency Crash
 As you know, January and February 2018 have not been cryptocurrencies finest hour. January brought a steady decline followed by a brief resurgence just to crash completely. So as the total market capitalization is below 400 billion, I would like to take this time to reflect on probably the most frequently given advice and most popular meme in the cryptosphere. HODL, or 'take out a position and hold it until your rich' meme. The whole idea is based around heping fresh traders earn profit by buying a batch and holding onto it until they make significant gains. At first glance the logic behind it seems solid: cryptocurrencies as a whole are on an upward trend, the technology behind it is solid and revolutionary. Grab a bag, let it sit for a year or so and hope for the best. Except a large percentage of people who try to follow the HODL rule are inexperienced daytraders getting in at all-time highs at an overvalued market expecting to buy a lambo in a few months. They talk the talk when the market is up, but when the panic sets in they tend to sell. Even more importantly, they estimate the value of assets unrealistically and thus fail to take out profit. During the boom I was arguing with a speculator online, who claimed that XRP will be worth $100 in a year. That would require a market capitalization larger than the circulation of the US dollar! In any case, there is nothing wrong with making a long-term investment and setting aside money to invest in something with medium volatility and ahigh likelihood of long-term gain. It makes no sense, however, to not take out the profit you make on something as volatile as cryptocurrency. In between the period of the middle of December 2017 to the beginning of February 2017 the market cap of cryptocurrencies has doubled from ~412 billion to ~830 billion and back to ~400 billion again. https://steemitimages.com/DQmYyWFnjKriLRFHDkcApEhMoPg2E3wgvRXUi6KvzGVXWzH/Screen%20Shot%202018-02-02%20at%2017.43.34.png During this short period many coins went up in price 8-15 times! And then right back again. This means a good trader can 10 x his or her portfolio, take it out and then 10 x it again as the market recovers. Rinse and repeat. Timing the market is of course, difficult, but it is a much better to take out significant profit and buy back in, rather than hold and lose all the progress you made, or worse, end up on a loss.