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Bitcoin is the leader in terms of trading and exchange, followed by Ethereum and USDC. These cryptocurrencies have gained significant popularity over the years as more and more users have adopted them into their investment portfolios, some of which have become significant whales in the market.
Bitcoin’s popularity and use cases have grown so much that the coin is now on the verge of being accepted as a legal currency worldwide. In El Salvador, citizens are already using Bitcoin as a means of payment and exchange, and other countries are considering taking this step for financial gain.
Cryptocurrencies can be beneficial to the country. Binance data is as follows: There are a variety of ways to buy Bitcoin, from using a debit or credit card to using third-party payments, making transactions fast, secure, and efficient.
However, studies show that users prefer to keep their bitcoins for themselves rather than using them for exchanges. Here’s why:
Almost half of BTC supply is stagnant
According to data on BTC supply, a surprising 45% of the cryptocurrency has not been moved by users for around 6 months, meaning that even during the difficult times Bitcoin has been going through since the beginning of the year, people have not let go of the coin. The coin got off to a good start due to the approval of the BTC ETF, but it has slowly moved in the opposite direction as institutions have not bought the stablecoin, and the price has been fixed for some time since the beginning of the month.
So it’s easy to understand why investors are more cautious about their moves. The unpredictability of the cryptocurrency market has been particularly tricky. So investors prefer to do nothing about Bitcoin and wait for a more profitable spending or buying opportunity.
Long-term holders (LTH) may have made significant gains on the network despite the recent price decline. Still, the significant value fluctuations show a trend of investor uncertainty.
Is it a good strategy to hold BTC for the long term?
Holding Bitcoin or other cryptocurrencies for long periods of time without selling or buying is part of the HODL strategy (holding for dear life). This strategy means that the longer you keep your coins in your wallet, the faster their value will increase. At the same time, holding cryptocurrencies when the market is volatile is a safe way to protect your investment.
This strategy was first named in 2013 because the huge volatility of the Bitcoin price made people afraid to do anything with Bitcoin. Whether you sell or buy, you risk losing all your assets. As crypto experts believe, the best time to hold cryptocurrencies is always when the market is moving.
Holding is a good strategy to combat FOMO (Fear of Missing Out) because it helps to suppress the bias and fear that causes investors to sell or buy cryptocurrencies without analyzing the situation.
HODL and DCA are the most important investment methods.
In addition to holding cryptocurrencies for as long as possible, investors can also approach dollar-cost averaging, which involves investing in cryptocurrencies regularly for longer periods of time despite price fluctuations. This strategy reduces the average cost per week and slows down the impact of volatility on the asset.
The benefits of DCA are:
• The amount of money being spent on investments has decreased.
• Be more disciplined in your investments.
• Enhanced by automation
• Solves the FOMO problem.
Beginners typically use DCA as they become accustomed to the market’s volatility and unpredictability. Also, having separate assets to hold for longer can help build wealth. Therefore, long-term investors can also benefit from this strategy combination.
However, the holding strategy has its drawbacks.
In addition to ensuring immunity from long-term volatility and promoting financial inclusion, the HODL method is far from perfect, as it can expose investors to several difficulties. First, holding cryptocurrencies for a longer period of time does not automatically protect against market risk and depreciation, so it is very important to adjust your portfolio from time to time.
On the other hand, having a small number of stagnant cryptocurrencies in your portfolio can make your portfolio unstable. Vulnerable to attackersThis is especially true if you have previously purchased cryptocurrencies with a debit or credit card. Most exchanges are secure, but even the smallest breach in their systems can make you a victim of hackers.
Finally, holding only means you have less exposure to the market, which is essential when learning how to deal with cryptocurrencies. Since you are primarily using simple tools for holding, you may be less likely to be familiar with more crypto terminology and strategies, or interact with other investors.
So what can we do to keep things balanced?
It’s best to know that no matter what you do, you can’t completely withstand the volatility of the cryptocurrency markets. However, there are a few things you can do to reduce the impact on your portfolio while learning more about triggers and factors.
Holding BTC and other cryptocurrencies for longer is essential for accumulating wealth. However, you still need to invest regularly to be active on the network. Finally, these two strategies should be combined with portfolio diversification.
Diversifying your cryptocurrency assets is one of the most essential ways to succeed. When you closely analyze the performance of a coin, you can either leave it alone or increase its value depending on the market trend. For example, it is best to invest during a bull market, as the general investor sentiment is positive and there are numerous technical improvements. On the other hand, a bear market is less optimistic, so you may want to hold your coins and refrain from doing so much cryptocurrency activity.
Are you holding Bitcoin for a longer period of time?
Holding cryptocurrencies is an effective way to build wealth, especially with coins like Bitcoin. At the same time, adding more assets like Ethereum, altcoins, and stablecoins balances your portfolio and makes it less vulnerable to risk and attacks. In light of recent events in the cryptocurrency market, investors have been holding Bitcoin much more than before. Holding is a productive investment strategy along with dollar-cost averaging and diversification.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.
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