The word "hodling" was coined in the most unlikely of circumstances. In an old bitcointalk thread, a user declared that he would hodl, a misspelling of keep, his bitcoins even if prices fell. He had, admittedly, consumed a fair amount of whiskey prior to his appointment.
So, should you hodl or should you not hodl? What are the signs that it's time to sodl? Sodl is a misspelling of the word sold, meaning that someone is selling their cryptocurrency. So, in this post, we'll go over all of the obvious indications that it's time to sell your cryptos and cut your losses.
Understanding Crypto Trading
To begin, cryptocurrency trading is not the same as traditional stock trading. Bullish markets, bearish markets, and individual line crossings are still important in a Moving Average Convergence Divergence (MACD) study. In cryptos, however, the causes of swings are very different.
The halving of Bitcoin, for example, still ensures high price appreciation, even though the business situation is severe. Small altcoins are typically the product of whale pumper dumper investors because they lack a specific objective and are currently on a strong run.
Regardless of how successful the current bull run is, they easily fizzle out after the whale has fulfilled their targets and opted out.
So, what are the warning signs that continuing to hodl might result in massive value losses?
Whale Investors are Sodling
There's no more blatant indication that rates are about to fall than this. Institutional investors and ultra-high net worth individuals (UHNWIs) hold substantial assets in every cryptocurrency they invest in. As a result, all market analysts keep a close eye on their behaviour.
When a large whale starts selling off their crypto assets, it sets off a chain reaction that cascades down the market. If other whales follow suit, it will signal to the market that there is no longer any faith in the cryptocurrency's value development.
Other investors who closely monitor such activities begin selling their assets in the coin, causing wholesale value crashes. In such a situation, procrastination is a bad business decision.
Negative government policy aimed at cryptocurrencies is already in place.
Governments have a tremendous impact on asset prices, including in the crypto room. The anti-crypto activities of several governments demonstrate their perception of cryptos as disruptive and a danger to their legal tender sovereignty.
Furthermore, due to the anonymity of all transactions, many governments continue to view cryptos as a refuge for illegal money transfers. The platform also employs a decentralised business model, which the government considers to be faulty. As a result, it could result in legal action being taken against such cryptos.
The native token of that blockchain experiences large value drops in such proceedings, similar to the SEC filing against XRP. Regardless of how much the price of a digital asset has appreciated, inspiring one to keep hodling is a strong indication that one can sell.
Security Concerns Persist
A single security breach isn't cause for alarm. Prices will drop slightly as the technical team works out the kinks, but after that, it'll be back to development. It has now happened to the majority of blockchain systems in use. If the violations occurred over a long period of time, such as months or years, a second or third problem isn't a cause for concern.
Unfortunately, many genius online fraudsters and hackers exist whose sole aim is to find a flaw in a system and exploit it for financial gain. However, if several breaches occur in a month's time, such as three big ones that are all linked, it's cause for concern.
It demonstrates that the blockchain's technical team is having trouble solving the security issue. The possibility of losing their hard-earned savings would make all investors, from whales to retail, feel threatened. Many people will begin to opt out, signalling that you can do the same and stop carrying.
The loss of key investors would cause asset prices to plummet. However, it is important to keep track of the technical team's progress in resolving the issue. Continued hodling is still possible if they succeed before the mass exodus of investors.
Final Thoughts
Knowing when to stop hodling is crucial for avoiding irreversible harm to one's properties. The signs mentioned above are not all-inclusive, but they do include the most important indicators of a potential price drop.
Crypto trading, on the other hand, is a one-of-a-kind experience. Market dynamics can shift quickly, making hoarding a coin very profitable when it seemed unsustainable just a few days ago. A whale that left the market, making analysts wary of future prices, could decide to return, or be replaced by a larger one, driving prices higher.
