What are the Benefits of HODLing cryptocurrency in a Bear Market?
If you are a newbie in the crypto market, don’t panic! Cryptocurrencies have gone through the “bear market” several times. Let’s briefly recap the most significant ones and see what we can learn from them.
- The First Bear Market (2011-2012): Back when Bitcoin was only 3 years old, Its price fell from $29 to $2.10 within five months, followed by a long sideways movement.
- The Second Bear Market (2014–2016): Bitcoin’s price later tumbled from $1,135 to $175 within a month after the Mt. Gox exchange collapsed, but rose back in 2017.
- The Third Bear Market (2018-2020): “The Crypto Winter”, one of the most infamous Bitcoin crashes, caused the price to fall from $19,640 to $3,185 within a year, followed by months of sideways movement.
- The Forth Bear Market 2020-NOW: Due to the spread of COVID-19 around the world, Bitcoin’s price reached $12,000 and dropped back to $4,000 on March 12, 2020, which is now known as “Black Thursday.” Once again, Bitcoin recovered and made its new all-time high at $68,789.63 on November 10, 2021.
The entire crypto market was stunned by the higher-than-anticipated inflation rate rise as CPI figures hit a 40-year peak of 8.6% in May 2022. This has fueled concerns that the FED will be forced to take a more heavy-handed approach to combat inflation.
What should we do with the tokens that we invested in?
Although no one knows how long this bear market will last, we advise everyone to stay strong. Don’t panic over the market volatility and “HODL”.
What does it mean to HODL?
“HODL”, a slang that is gaining popularity among the crypto community, has come to mean “hold on for dear life”. Crypto HODLers, like buy-and-hold tokens, pride themselves on “holding on” rather than selling their cryptocurrency, no matter what happens in the market.
Benefits of HODLing
- Be Patient
If you are prepared to hold your assets for five or 10 years, you can afford to take no action at all during a bear market. Simply wait it out. Prices will rise, your portfolio’s value will be restored, and you will resume earning profits.
- Look Beyond Price
If you believe in blockchain technology and understand the fundamentals of cryptocurrency and the market cycles, short-term fluctuations will mean nothing to you. While a crypto’s purchase price may drop during a bear market, you might retain your portfolio to preserve your position.
Remember, There Are No Risk-Free Investments. If you plan your response to the bear market carefully and HODL patiently, you will be able to reduce losses and even build the value of your portfolio despite a market where prices are plunging.