Should You HODL Bitcoin?

The term “HODL” began as a typo for the word “hold.” It appeared on a forum, and the crypto community found it so amusing that they started using “HODL” as a term to denote holding (rather than selling) one’s cryptocurrency.

Key Takeaways

  • “HODL” was originally a typo meant to indicate “hold” cryptocurrency.
  • Bitcoin, in particular, has been known for wild fluctuations in price and volatility, making the decision as to whether to HODL it more challenging.
  • Increasingly negative sentiment and scandals make a case for selling bitcoin.

Bitcoin’s Highs and Lows

Bitcoin brought seasonal cheer to investors when its price gathered pace and broke records in December 2017. The heady run-up in its price had bitcoin enthusiasts making wild forecasts about its price down the line. Their prognoses were much gloomier in March and April 2018. The cryptocurrency’s price was down by more than two-thirds from its December 2017 high and dropped to $3,237 by December 2019—a decrease of roughly 83%. On Nov. 11, 2021, Bitcoin reached an all-time high of $68,789 before ending the day at $64,995. Two years later, the cryptocurrency’s end-of-day price was close to $34,700 after spending some time in the $25,000 range.

So, bitcoin is well-known for its wild price fluctuations—volatility that investors have come to expect. But that doesn’t make it any less anxiety-inducing when money is involved. Bitcoin’s price movements sometimes force investors to reconsider their opinions and positions. Here’s a brief recap of the bull and bear cases for bitcoin.

The Bear Case for Bitcoin 

A steady stream of hacks and scandals from within the cryptocurrency ecosystem has ensured that the currency’s reputation as a venue for criminal activities persists. There have been many prominent examples, from Silk Road to the FTX Exchange scandal. Bitcoin investors have appeared to take it all in stride, continuing to trade during massive price spikes and drops.

The introduction of bitcoin futures and the entry of institutional money into its ecosystem was supposed to cut back on volatility, but a quick look at price swings shows it didn’t help much.

Regulators and economists around the world have added to the pressure by criticizing bitcoin in public forums. Their stance has made governments wary of bringing bitcoin under legal cover. Globally, regulatory agencies have introduced or are developing laws regarding cryptocurrencies and crypto-assets, fueling the bullish stance that cryptocurrency is on its way down.

Bitcoin’s high transaction fees were considered a deterrent to mass adoption, but they fell after the community introduced network upgrades—although they can still be high based on congestion. Technological solutions, such as the Lightning Network and the Taproot upgrade, were supposed to be a remedy for Bitcoin’s scaling problems because they speed up the network. However, bears remained skeptical after the Lightning network failed to garner widespread adoption on many large and popular platforms until 2022. As of 2023, exchanges like Binance and Coinbase have completed or announced Lightning integration, so it remains to be seen how the bears will react.

The Bull Case for Bitcoin 

The primary bull case for bitcoin is based on the virtues of patience. Bullish bitcoin investors point to the cryptocurrency’s previous price action as proof that bitcoin’s price will rise again.

Large corporations are becoming more involved in the space. Google, Meta (formerly Facebook), and X Corp. (formerly Twitter, Inc.) are among some of the big names that have decided to participate in cryptocurrency. Meta has relaxed its cryptocurrency ad policies, and the rest have all begun accepting cryptocurrency payments.

Actions taken by governments and regulatory agencies also indicate a thawing of positions related to cryptocurrency. Bitcoin Futures ETFs introduced further liquidity into Bitcoin’s ecosystem. Pressures from cryptocurrency investors on regulators may be causing the straps to be loosened—cryptocurrency fans declared victory in an appeal ruling against the Securities and Exchange Commission’s denial of Grayscale’s Bitcoin Spot EFT in September 2023, and many expect one to be approved.

Technical developments within Bitcoin’s network also point to a brighter future. The list of nodes accepting Lightning Network is increasing, and, as stated, some large platforms, such as Coinbase, have decided to integrate it as well.

Who Originated Bitcoin?

The creation of the original Bitcoin cryptocurrency in 2008 is credited to an unknown party or parties who used the fabricated name of Satoshi Nakamoto. This individual or entity turned the open-source license over to developers in 2010.

What Is Cryptocurrency?

Cryptocurrency is a virtual currency that uses cryptography to channel secure transactions that may be recorded on a distributed ledger. Transactions can be either “on-chain” or “off-chain,” depending on whether they’re recorded on a ledger. Blockchain technology prevents cryptocurrency from being counterfeited.

What Are Some Other Types of Cryptocurrency?

There are thousands of versions of cryptocurrency in addition to bitcoin, including ether, dogecoin, and non-fungible tokens (NFTs), which soared in popularity in 2021.

The Bottom Line 

The bulls are of the opinion that bitcoin’s price follows a predictable pattern based on previous trends and that it will rise again. But the bears point to negative sentiment, regulatory issues, and scandals associated with the original cryptocurrency to make their case for selling bitcoin.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own bitcoin.

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