HOLDING CRYPTOCURRENCIES: LONG-TERM INVESTMENT STRATEGY

WHAT IS HOLDING?

Hodling refers to the practice of buying cryptocurrencies and holding them for an extended period with the aim of selling them when their price has increased significantly, thereby generating profits or capital gains. Although this investment strategy is considered the simplest, least risky, and relatively passive, it does not mean that it cannot be highly profitable for investors.

WHY INVEST FOR THE LONG TERM?

Cryptocurrencies tend to increase in value over time. Bitcoin represents the clearest example of this phenomenon, showing significant increases during each halving that occurs approximately every four years. There is a direct correlation between the growth of Bitcoin and the behavior of altcoins, which underpins the strategy of holding positions during similar periods.

Once you gain deeper knowledge about trading and accumulate practical experience in the markets, you can consider higher-risk investment strategies or combine them with the holding approach.

The main objective of holding is to make a profit by buying at low prices and selling at higher prices. However, it is important to understand that the price of your assets may temporarily decline. The essence of this strategy is precisely to hold the positions until the prices recover and exceed the initial purchase levels.

WAYS TO HOLD

There are various strategies to implement cryptocurrency holding:

1. Buy-and-hold (buy and hold): The simplest way is to make a significant initial investment and hold the assets until deciding to sell them in the future.

2. Dollar Cost Averaging (DCA): This strategy involves making regular purchases for similar amounts, regardless of the asset's price or the market phase. The goal is to progressively increase your position and average the acquisition price over time.

3. Buy the dip (buying the dips): Similar to DCA, but focusing purchases during market corrections. For example, when a cryptocurrency falls between 10% and 15% of its value, it is taken as an opportunity to acquire more units, anticipating a future recovery.

These strategies are particularly effective, but if you are a beginner in the world of cryptocurrencies, it is essential to carefully analyze historical patterns to understand the volatility limits of the chosen assets and avoid premature purchases.

CONSIDERATIONS ON AVERAGED PURCHASES

Although periodic purchasing strategies offer numerous advantages, they also present some limitations:

• They reduce the possibility of benefiting from significant one-time discounts on the price.
• In sustained bull markets, they may be less profitable than a single investment made at the beginning.
• If you have a significant amount of capital set aside for investment, the gradual implementation means that part of your funds will remain unused during the accumulation period.

PRACTICAL CONCLUSIONS

Beyond theoretical considerations, the essence of holding is the progressive accumulation of digital assets. It doesn't matter much whether you choose the first or the second strategy; what is fundamental is to establish a systematic plan for acquiring and maintaining cryptocurrencies until you achieve your desired goals.

Human nature drives us to constantly want more, but for beginner investors, it is advisable to start with basic strategies and gradually mature their knowledge until they become profitable traders.

Long-term investment in cryptocurrencies offers a viable alternative for those who prefer to minimize exposure to daily market volatility while taking advantage of the potential growth of the blockchain ecosystem in the coming years.