Cryptocurrencies are highly volatile, and often, at the end of the day, hodling turns out to be the lowest-risk strategy.
According to Cointelegraph, recent research looked at what would have happened if someone invested $10,000 in the S&P 500 back in 2006 — and looked at several different scenarios.
Those who remained fully invested ended up with a balance of $41,100 by Dec. 31, 2020. Missing the market’s 10 best days would have resulted in a balance of $18,829 — that’s a whole $22,270 less.
At the same time selling off your crypto in a panic creates a far greater risk to the health of a portfolio.
Hodling is emotionally difficult indeed, especially during the times when prices start falling. Leaving crypto in an account means that these assets don’t grow. As a result, you have a temptation to start trading.
Staking is something that can help you feel better while hodling. Staking offers a passive rewards mechanism designed to give token holders a steady yield on their digital asset holdings. As tokens are staked somewhere out of your reach, there’s no risk of panic selling. They’re also not stored in an exchange wallet where they can get hacked. At the same time, staked assets can deliver a yield, meaning that they will accumulate value over time.
All this makes sense if you hodl cryptocurrencies that have a long-term future, and use a reliable staking platform that you can trust.