How Long Should you HODL your Digital Assets?

The time horizon for holding a digital asset, such as a cryptocurrency, can vary greatly depending on the individual’s investment goals and risk tolerance.

For many crypto investors, crypto is their first time investing into any asset. While it can be tempting to hit the buy button because of what you see in the news cycle, this is actually how most folks lose money on investing.

Before buying, it’s helpful to determine how long you intend to hold for. Some buys are only attractive on a short-term time horizon like months, weeks or even days in some cases. While other buys are long-term plays for months, a year, or even multi-year holds.

Therefore, in order for you to determine how long you should HODL, you have to ask yourself a couple fundamental questions first

What are your Investment Goals?

Some common investment goals include building long-term wealth with yield generating financial products such as stocks, bonds, real estate, and crypto. Another goal could be saving for retirement or generating income. Preserving capital is yet another. You may want to be saving for a down payment on a house. Paying for your child’s education.

What is your Risk Tolerance?

Understanding your Risk tolerance is key before you invest into crypto. Your risk tolerance describes your ability to handle market volatility and loss that you are willing to accept as an investor relative to your age.

Younger investors may be more willing to take on risk, as they have more time to ride out market fluctuations and potentially benefit from the long-term growth potential of higher-risk assets.

Older investors, on the other hand, may be more focused on preserving their wealth and may be more risk-averse.

An investor’s financial situation can also impact their risk tolerance. Investors with a larger financial cushion may be more willing to take on risk, as they have more resources to fall back on in the event of a market downturn. Investors who are more financially vulnerable may be more risk-averse in order to protect their assets.

Finally, an investor’s personal comfort level with risk can also play a role in their risk tolerance. Some investors may be naturally more risk-averse, while others may be more comfortable taking on risk in pursuit of potentially higher returns.

Do I HODL Short-Term or Long-Term?

Once you establish your risk tolerance and investment goals, the decision whether to hold digital assets short-term or long-term will be clear for you. And just because your time-horizon is long and your risk tolerance is high doesn’t mean it’s right for your grandma, your neighbor, or your friend. Everyone is in a different financial position.

Now is a good time to re-ask yourself, Do you still want to hit that “buy” button? Thanks for reading!

• Disclaimer -Nothing I write should be considered financial advice. This is for educational and entertainment purposes only. I am just an internet wolf. I am biased because I hold digital assets in my portfolio thus it benefits me to speak highly of projects I am invested in. The cryptos that I hold in my portfolio is not a reflection of what you should hold. I am not a financial advisor

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