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The Art of Doing Nothing (HODL)

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Avatar for mypathtofire
Written by   57
10 months ago
Topics: Crypto, Bitcoin, Investing, HODL, Hodling, ...

It is a well-known line of thought among the fiat investment community that passive investing beats active investing over the long run.

When investors start tinkering with their portfolios and diversifying (de-worsifcation) into different assets and re-balancing, this can cause them to get a lower return than had they done nothing.

Doing nothing or buying and holding (BAH) as it can also be known, can make sense when you look at it from a total return viewpoint. Your total return will be the market return less the transaction fees.

Does the same strategy hold up for crypto?

Does it make sense to have diversification in different projects, such as the top 10 or top 20 cryptos and the latest crypto project in case it moons? Or should we just invest in 1 or 2 blue-chip tokens and hold? And then do... nothing. Just HODL.

The term HODL "hold on for dear life" was originally coined as the legend goes in 2013 by a forum user "GameKyuubi" mis-spelling the word hold. The meme then got a life of its own. But is HODL just the same as the stock market term BAH?

The other factor within the crypto market is does it make sense to chase yield? Participating in Pools, Farms, Yield Optimisers, Staking, Airdrops and the like for the many different coins. Should we just be hodl-ing?

Is the boring buy and hold on Bitcoin and Ethereum enough? Doing nothing. They also produce passive income, although not at levels of stable coins and yield protocol platforms. But isn't total return more important than the passive return?

I think that it can make sense to chase extra yield in the crypto space in some cases. But with the average annual return of bitcoin around 90℅ since 2011, where are you going to find a better return?

Is 90% not enough for doing nothing?

Resources

  1. https://www.investopedia.com/terms/h/hodl.asp

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Avatar for mypathtofire
Written by   57
10 months ago
Topics: Crypto, Bitcoin, Investing, HODL, Hodling, ...
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