A passive investment strategy, also called “buy and hold,” for which the investor buys a cryptocurrency asset and holds it for a long period of time regardless of fluctuations in the market. In the case of high volatility markets such as cryptocurrency.
The first use of the term dates back to December 2013, in a bitcointalk post titled “I AM HODLING” by Sr. Member GameKyuubi after (in his own words) had some whiskey.
GameKyuubi’s reasoning was that in extremely volatile markets, at a zero-sum game such as trading, inexperienced traders often lose to more seasoned investors and should focus instead on long term investments. In his own words: “You only sell in a bear market if you are a good day trader or an illusioned noob. The people in between (sic) hold. In a zero-sum game such as this, traders can only take your money if you sell.”
In the case of pump and dump schemes, often seen in cryptocurrencies of small market cap, the advice can be malicious, as investors attempt to exit the market before those who are piously holding an asset which is rapidly becoming worthless.
The aim of cryptocurrencies is to become a self-sovereign store of value, not necessarily a financial investment. Many cryptocurrency evangelists hope for their currencies to appreciate due to the devaluation of fiat government-backed currencies into hyperinflation, eventually transacting exclusively in cryptocurrency. Holding advice is thus never to exchange cryptocurrency into fiat-based currencies, and never spending cryptocurrencies until their ultimate global adoption.