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Investors to ‘hodl’ bitcoin despite crypto winter

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More than two-thirds of bitcoin investors have no plans to sell their holdings in the next five years, according to a survey of cryptocurrency clients of financial advisory and fintech deVere Group.

The survey found that 68% of 624 people questioned worldwide said they would “hodl” for at least five years.

‘Hodl’ is a crypto slang term meaning to buy-and-hold. It implies not selling when markets go down or become volatile. It originated from a typo of ‘holding’ as ‘hodling’ in a 2013 online post that went viral.

“The survey shows that despite coming 70% off its historic all-time high last November, investors remain confident about bitcoin’s future trajectory,” said Nigel Green, chief executive and founder of deVere Group.

“Bitcoin remains the best-performing asset class in the world and has consistently ranked amongst the best for both traditional and crypto investment sectors over the last few years.

“These Hodlers will be aware that cryptocurrencies are set to play an increasingly dominant role in the mainstream financial system in an ever-more tech-driven world.”

Other recent events might have also contributed to the survey’s findings, said the deVere CEO.

“News that highly influential crypto enthusiast and tech superstar entrepreneur Elon Musk would be buying – and now has bought – social media giant Twitter is likely to make people not want to sell their holdings.

“It’s a similar story with Michael Saylor. The CEO of MicroStrategy, who has spent almost $4 bln on bitcoin, recently noted that the cryptocurrency is the only money that has the potential to align “all interests to focus on peaceful engagement, rational action, and productive industry”.

Future of finance

“Also, the soaring institutional investment is a huge sign that crypto is the future of finance and, again, this can be expected to cement individual investors’ convictions,” added Green.

An example of this increasing interest from institutional investors came in August when Black Rock, the world’s largest asset manager, with $10 trln in assets under management, partnered with a crypto exchange to provide its clients with access to digital currencies.

More recently, Mastercard announced a service that allows banks to offer crypto trading, while Visa is to offer debit cards linked to users’ trading accounts.

Whilst the hodl strategy appears to remain as popular as ever with bitcoin investors, deVere’s Green said it does not come without risk.

“Investors may have to experience wild ups and downs of bitcoin values, which means they should have much larger risk appetites than investors of conventional assets. They should have sufficient capital capacity to avoid forced sales to meet unexpected liquidity needs,” he explained.

In addition, investors should not become emotional about bitcoin.

“I’m a confirmed, long-time proponent of it.  But bitcoin should be treated as any other investment asset.”

Green concluded that, “over time, ‘hodling’ has proven to be a savvy strategy for bitcoin investors. This makes sense as the cryptocurrency’s fundamentals are, in fact, becoming increasingly robust.

“The hodlers are likely to be rewarded in the near future as the so-called ‘crypto winter’ is beginning to thaw.”