Ever wondered why it's super difficult to beat HODLing by trading over a long period of time? Why do HODLers always win?
Let's investigate that in this article, and see why!
To start, let's see four charts. The S&P500 (To investigate the phenomenon in real world assets), the BTC/USD chart, the LINK/USD chart, and the chart of any random stock I see first on tradingview when I close my eyes and pick any letter on the keyboard.
We will be investigating these over the weekly charts to have a very clear view of what exactly is going on. Let's go.
S&P 500
The S&P 500 (or SPX as it's usually called) is up by 90118.91% since its inception. This means that anyone that invested $1 in the S&P 500 will have roughly 90118 today. That is an impressive performance!
Now let's take a look at BTC/USD monthly from Bitstamp.
BTC USD
BTC/USD is up over 40,000% since it got listed on Bitstamp in 2011, which is a huge return on investment for a 10 year investment.
Now LINK/USD
LINK/USD
Since its launch on Coinbase in 2017, LINK has risen over 130,000%, which is just insane for anyone who bought in at that time.
Now for the random stock, just to show proof of concept.
I closed my eyes and got the letter "D". Punching that into the search bar on TradingView, the first stock that comes up is called "Dominion Energy" and it also has trended up since inception, running up from $1 to a whopping $78 in a few years, a massive return for investors.
If we take a gander at all these charts, what we see is that they all came from the bottom and slowly but surely trended upwards. They did have some drawbacks while trending upwards, but eventually they all trended to great heights. This is basically the way the market works.
It doesn't work the same for all coins and stocks, yes, but it works most of the time.
To be frank, if you have the patience and invest in a team with a good reputation and amazing, unique product, you will be rewarded in the long term.
So why is it harder for traders to win?
Let's take a peek at the BTC/USD chart in March.
There was a ~70% drop in a matter of minutes. I'm certain all traders (except those who were magically short the asset) were wiped out completely. HODLers would definitely have bought lower, and if they had strong hands, won't have sold their positions.
Assuming traders even bought the March dip, they would have sold for a 100% gain at resistance, where BTC was promptly rejected. They would then have missed out on the 500% pump remaining from the resistance. HODLers win again.
What do you think of this topic? What is your reason for why HODLers win? Have you seen any trader that beat out a HODLer? Let's talk in the comments!
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