If you can’t HODL you won’t be rich ~CZ.
The HODL meme is now more than just a meme. It’s a solid cryptocurrency investment strategy that’s been proven to be efficient.
HODL means to hold a particular cryptocurrency for the long term (1 to 10 years or more), regardless of the short-term volatility. And it’s the easiest and most popular way to make money with crypto.
That’s why most experienced crypto investors always advise you to buy tokens with solid fundamentals and HODL for as long as it takes to see a significant profit.
It’s simple, less stressful, and more profitable, but also easier said than done as it takes strong conviction and discipline to HODL through the ups and downs.
That’s why I want to share with you how to set yourself up to follow through with the HODL strategy by making it difficult for you to sell.
Because, the harder it is to sell, the less likely you’re to do it. But it comes with serious risks which I also discussed at the end.
4 ways you can force yourself to HODL like a boss
Here are the simple tricks you can use on yourself to reduce impulsive selling and build a strong HODL gut.
The tricks are presented from the simplest to the hardest or most forceful strategy.
- Remove the gas fee coin from your wallet
- Use a multi-sig wallet
- Fixed-term staking
- Delete your 2FA key and App
1. Remove gas tokens from your wallet
Most blockchain networks require you to pay for transactions (gas fees) using their native coin.
For example, to transfer or trade any token on Ethereum, you need ETH to pay for gas fees. And if you don’t have ETH in your wallet, you’ll not be able to do anything on the chain.
The goal here is to make sure you don’t have the coin required to pay for gas fees in your wallet. This will make it impossible for you to trade or make transfers impulsively.
Even if you’re a chronic ‘paper hand’, the process of looking for and transferring the coin you need to pay for the gas fee into the wallet will give you time to cool down and think it through.
This trick will not make it impossible for you to sell, but it will delay your impulsiveness and give you time to consider the move you’re about to make.
For example, I have some tokens in my wallets that I haven’t moved for over a year because there’s no ETH in the wallet to pay for gas fees.
The inconvenience of buying ETH and sending it to the wallet, in addition to the fees involved makes me think twice and reminds me that I don’t really want to sell or move those tokens in the first place.
2. Use a multi-signature wallet
Multi-signature (multi-sig) wallets require 2 or more signatories or private keys to authorise any transaction on them.
So, if you store your crypto assets in a multi-sig wallet that’s controlled by you and your spouse, parent, siblings, or anyone else you absolutely trust, it creates a barrier against impulsive transactions.
Because, everyone with a key to the wallet understands the pre-established rules, conditions and exceptions to be met before authorising a transaction. And they will not consent to any transaction that goes against those rules.
First, you need to reach out to the co-signers, convince them that the transaction meets the established requirements, and get the required number of signatures to authorise it.
The higher the number of signatories and the more signatures required to authorise a transaction, the more difficult it is for you to make impulsive transactions.
This puts a lot of inconvenience and delays in your way when trying to move the assets and limits the influence of FUD (fear, uncertainty and doubt) or FOMO (fear of missing out) on your investment decisions.
3. Fixed-term staking
Fixed-term staking requires you to lock up your crypto assets for a specified period (days, weeks, months, or even years).
During this time, you won’t be able to withdraw the coin until the specified date and thus you can’t sell or transfer it. Thus forcing you to HODL.
However, some platforms offering fixed staking allow you to withdraw earlier with a very high fee (up to 25% to 50% of the deposited amount) which is intended to discourage you from withdrawing.
But some don’t even give you that option of early withdrawal at all. So, even if you want to, you can’t withdraw or sell.
I like this strategy because while you’re HODLing and waiting for the price of the token to increase over time, you’re also earning passive income through the staking rewards.
4. Delete your 2FA Key and App
This one is for those who are holding their crypto assets on a centralised platform for whatever reason such as trading, staking, farming, lending, etc.
This article is NOT about how risky holding your asset on centralised platforms is, I know you know that already.
This is about making it very hard for you to sell or withdraw the assets, especially when your original plan is to keep them there for a very long time.
All you have to do is activate 2FA authentication for your account and delete the authenticator key and app from your devices.
This ensures that even if you want to withdraw your assets, you can’t because you don’t have the 2FA code or keys required to authorise a withdrawal.
To gain access or reset your 2FA, you’ll have to look for where you stored your 2FA key or contact customer service and follow some inconvenient and time-consuming process which hopefully will make you rethink the withdrawal.
The risks of forced HODL
When you force yourself to HODL using any of the methods discussed above, you lose the ability to:
1. Exit the market during a crisis
Firstly, if there’s a war or some really serious emergency, you won’t have access to your money.
Secondly, if the project gets hacked or exploited and the price drops fast like the LUNA/UST crash, you won’t be able to react swiftly to save your investment.
2. Take advantage of market opportunities
The crypto market is notorious for unexpected downward or upward price swings.
If the price of the coin pumps unexpectedly due to some news and you wish to sell, you won’t be able to do so easily if your funds are locked up or inaccessible.
This happened to me with my locked Biswap (BSW) token. I locked it for 3 months and after a month, the token was listed on Binance and pumped to over $2.
I wanted to sell but if I withdrew before the due date I would lose 25% and that’s how I held until it dumped back down to below my initial price.
It hasn’t recovered from that dump till today and that’s how I missed that profit opportunity.
3. Rebalance your portfolio
Sometimes, you need to reevaluate the tokens you’re holding and reallocate your capital accordingly based on the changing market dynamics.
If your coins are locked up in a forced HODL, you won’t be able to quickly react to the changing market situations and rebalance your portfolio accordingly.
So, before you decide to implement any forced HODL strategy on your crypto assets, understand your unique financial or investment situation and the various risks involved.
The harder it is to sell, the less likely you are to do so. You can use the above forced HODL strategies to turn yourself into a diamond hand ahead of the next bull run.
But, note that some of these are extreme ways to force yourself to HODL the crypto assets you plan to keep for a very long time.
Do not try them with assets you know you may need in the short to medium term.
Also, you must be extremely selective with the coins you force yourself to HODL as it’s not every token that will survive the next few months or years.
I suggest you do this only with tokens that have solid fundamentals or blue chip coins like BTC, ETH, BNB, USDC, USDT, etc.