Keep Your Bitcoin for the Long Haul
Bitcoin supporters often chant, “Never sell your Bitcoin.” This principle resonates during market downturns to deter panic selling, and resurfaces during price climbs since many believe current valuations are minuscule compared to future potential. So, if they claim to never sell, why are they so concerned with its price (oh, they truly are)?
Grasping HODL
The term “hodl” has become a key part of the dedicated Bitcoin community. It’s a humorous misspelling of “hold” that captures the spirit of the “Never sell your Bitcoin” mindset.
The origin of “hodl” can be traced back to a 2013 post on the Bitcointalk forum by a tipsy user known as GameKyuubi. The thread, titled “I AM HODLING,” was a hilariously incoherent outburst during a drop in Bitcoin prices (and a personal disagreement with his girlfriend).
In his post, GameKyuubi admits to being a poor trader and decides to hold onto Bitcoin instead of attempting to time the market like more seasoned investors.
“You only sell in a bearish market if you’re either an experienced day trader or a naive newcomer. Those in-between hold. In this zero-sum game, others can only profit from you if you choose to sell.”
GameKyuubi’s message struck a chord with many, triggering a surge of responses encouraging others to HODL, creating a meme that has endured.
GameKyuubi’s assertion reveals he wasn’t entirely opposed to taking profits. He simply lacked the knowledge on when to exchange bitcoins for fiat currency, leading him to the conclusion to hold rather than become “a bad trader.”
Many who embrace the “Never sell Bitcoin” philosophy don’t take it literally. In discussions on Reddit regarding this topic, numerous Bitcoin enthusiasts have shared that they don’t convert their bitcoins into dollars. Instead, they prefer to buy more Bitcoin and hold it until a significant need arises. Some may sell BTC for major expenses, like a car, while using smaller amounts for day-to-day costs such as rent, keeping the majority of their holdings intact. For them, holding Bitcoin is more advantageous than fiat currency, positioning Bitcoin as a store of value rooted in the belief of long-term price appreciation. Hence, for this group, Bitcoin’s price remains an essential indicator, even if they haven’t liquidated any in years.
“Never sell Bitcoin to whales”
Whales are major holders of crypto assets, often worth millions. In the 2020s, Bitcoin price trends have increasingly been affected by whale transactions. A chart illustrating the correlation between Bitcoin price and wallet transactions involving over 10,000 BTC resembles mountains mirrored in a lake—whenever whale trading surges, prices typically drop, and conversely, indicating an almost inverse relationship.
When reflecting on GameKyuubi’s statement, “In a zero-sum game […], traders can only take your money if you sell,” we observe a parallel to another common saying: “Never sell your Bitcoin to whales.” These whales will acquire your bitcoins at any price. However, the chances of reacquiring what you sold drops considerably as Bitcoin prices rise, and whales are generally reluctant to sell.
A Proponent of Never Selling Bitcoin
Michael Saylor of Strategy is arguably the most outspoken supporter of the “Never sell your Bitcoin” principle. His company adheres to a “Bitcoin standard,” continually selling shares and incurring debts to purchase more Bitcoin. Since 2020, Strategy (previously MicroStrategy) has amassed over 500,000 BTC, equivalent to more than 2.5% of the total supply, and Saylor insists he will never part with his Bitcoin. He even suggested that destroying the keys to wallets containing large Bitcoin amounts could be a wise strategy.
Saylor encourages corporations and the U.S. government to adopt his model and start accumulating Bitcoin, claiming that those holding substantial Bitcoin reserves will hold significant influence in the future.
This viewpoint underscores that Bitcoin’s price may not be as crucial as securing as much Bitcoin as possible (with sentiments like “we are still early” and “Bitcoin is still undervalued”). This belief is evident in the apparently erratic timing of Strategy’s large Bitcoin purchases, often made on “wrong” days when prices are high (leading Saylor to earn the humorous title of “one of the worst crypto traders in modern history”). Nevertheless, Bitcoin’s price does impact the company, as it affects the valuation of Strategy’s shares (MSTR) and shapes the future of its Bitcoin-centric strategy.
Saylor asserts that if BTC prices plummet to $1, he would simply buy every available Bitcoin. Holding one of the largest Bitcoin reserves without any intention of selling raises thought-provoking philosophical discussions about wealth. However, let’s set that aside for now.