'Hodling' - its a term coined by the cryptocurrency community which is just a play on the word 'holding'. It means to hold your cryptocurrency investments during both bull and bear markets. But how long are you expected to hodl? 1 day? 1 week? 1 year? Well, that's for you to decide. If you invested at the top and have watched thousands of dollars disappear overnight from your portfolio, are you still expected to hodl? The cryptocurrency community thinks so - and sometimes with good reason.
Given the immaturity of cryptocurrency markets, assets can rise and fall 50% or more within a 24 hour period. Depending on the asset, they will rise and fall for certain reasons. These reasons can include pure speculation, a whale (a trader or group of traders with massive amounts of money that can manipulate the market price), good or bad news and of course good old fashioned rumours. But how do you know when to stop hodling and cut your losses? Well, no one knows that.
If you had bought Bitcoin in 2013 at its previous all time high of ~$1095 USD (or anywhere between $150 and $1095) then you would of seen your investment dwindle to a low of approximately $150 18 months later. Bitcoin fell into a brutal bear market from late 2013 to mid-2015. You'd be forgiven for not hodling through this as it was one of the worst bear markets that Bitcoin has experienced in it's lifetime. All the gains that people had seen had been wiped out. However, if you did hodl, your investment would of been worth ~$2600 at todays prices. Of course, there was no way to know if Bitcoin was ever going to go back to where it was, but the true hodlers were eventually rewarded. Bitcoin passed it's previous all time high and has since kept growing since February of 2017.
This is all well and good for Bitcoin, but what about the alt-coins that experienced the same rise around the time Bitcoin did? Well, Litecoin peaked at approximately ~$48 and has only hit that price again in June 2017. Other popular cryptocurrencies from late 2013 include Dogecoin, Namecoin and Peercoin. If you bought any of these 3 at or near their all time high, you will still be in a loss.
This begs the question, do you hodl only the most popular cryptocurrency? Bitcoin and Litecoin (the 2 most popular from 2013) have shown that this rings true. Ethereum didn't exist until mid-2015 which seems to be when the cryptocurrency market awakened again, shook off the bears and started seeing a bull market form.
I bring this topic up because this latest run up the cryptocurrency markets have seen since March of this year is eerily similar to what they saw in mid-late 2013. The massive bull market in mid-late 2013 lasted from July until December - just 6 months. If history is to repeat itself, it means the current bull run we are experiencing is due for a downturn in August of 2017.
Of course, this time is very different. The cryptocurrency space hasn't seen this sort of involvement since its inception. There are entire cohorts being formed (such as the Enterprise Ethereum Alliance) that are adding legitimacy to the technology behind crypto. There is also a tonne of developer activity with real, working products that incorporate all the best bits of blockchain tech. Even governments are getting involved! We may still be in the very early days (pre-alpha) of cryptocurrency and blockchain tech, but the future looks a lot brighter than it did back in 2013/2014.
The real test of a market is not when it is in a fiery rush but rather when it experiences a long and cold winter.