Benefits and Risks of HODLing Crypto: What Really Happens When You Hold Through the Crash

1 December 2025 8 Comments Michael Jones

Crypto HODLing Calculator

How HODLing Performs Through Crashes

Calculate potential returns from holding cryptocurrency through historical market crashes compared to traditional investments.

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This calculator uses historical data from Bitcoin/ETH price movements. Past performance doesn't guarantee future results. HODLing involves significant risk and volatility.

When Bitcoin crashed 75% in 2022, some people sold in panic. Others kept their coins. Those who held on didn’t just survive-they made history. HODLing isn’t just a typo from 2013 anymore. It’s a full-blown philosophy in crypto. But is it smart? Or just stubborn?

What HODLing Really Means

HODLing means buying crypto and refusing to sell, no matter what. Not because you’re clueless, but because you believe the long-term value will win. It’s not about timing the market. It’s about ignoring it. The term started when someone misspelled "holding" in a BitcoinTalk forum post during a big drop. Now, it’s a badge of honor. People with "diamond hands" HODL. Those who sell are "paper hands." This isn’t like buying stocks. You’re not holding a company that pays dividends or grows earnings. You’re holding digital scarcity. Bitcoin has a hard cap of 21 million coins. That’s it. No more. That’s the core idea: limited supply, rising demand.

The Real Benefits of HODLing

The biggest win? You avoid taxes. The IRS treats crypto like property. Every time you sell, trade, or spend it, you trigger a taxable event. If you hold, you owe nothing. Not a cent. That’s powerful. You let your gains compound without the government taking a cut each time. Then there’s volatility. Bitcoin dropped 30% in one day in March 2020. It lost 50% in 24 hours during "Black Thursday." If you sold every dip, you’d be broke. HODLers ride these waves. Since 2013, Bitcoin has had 10%+ daily moves on nearly 15% of trading days. The S&P 500? Just 1.8%. Most people can’t handle that. HODLers do. Staking adds another layer. After Ethereum switched to proof-of-stake in 2022, holders could earn 3-5% APY just by locking up their ETH. Cardano stakers got 4-5%. That’s free money. You’re not selling. You’re not moving. You’re just holding-and getting paid. And let’s not forget the psychology. Trading is exhausting. Watching charts all day, chasing signals, fearing FOMO. HODLing removes that noise. You buy once. You forget. You sleep. That mental relief is worth more than most people admit.

The Hidden Risks

Here’s the ugly side. In 2018, Bitcoin fell from $19,783 to $3,237. That’s an 83% drop. Ethereum? Down 94%. If you HODLed $10,000 in Bitcoin in January 2018, you had $3,500 by December. Meanwhile, that same $10,000 in the S&P 500 grew to $10,900. HODLing crypto isn’t guaranteed growth. It’s a gamble on belief. And what if you lose your keys? About 20% of all Bitcoin-3.7 million coins-is gone forever. Lost wallets. Forgotten passwords. Dead owners. That’s $120 billion vanished. No customer service. No reset button. If you HODL, you’re responsible for your own security. Then there’s hacks. Mt. Gox lost $530 million in 2014. Poly Network lost $600 million in 2021. Even if you store your crypto offline, exchanges can collapse. You don’t get FDIC insurance. If the platform goes down, your coins might vanish with it. Regulation is another wild card. China banned crypto in 2021. The market dropped 30% overnight. The U.S. SEC is still deciding what’s a security. One day, a new law could make your holdings worthless-or illegal. And the data? Bitcoin’s only been around since 2009. That’s 15 years. The stock market? Over 100. You’re betting on a tiny slice of history. No one knows how this ends. A sleeping HODLer on a couch while a robot stakes crypto on a glowing tablet beside him.

A sleeping HODLer on a couch while a robot stakes crypto on a glowing tablet beside him.

When HODLing Goes Wrong

Not all crypto is Bitcoin. In May 2022, Terra Luna collapsed. Its algorithmic stablecoin, UST, lost its peg. Then Luna’s price crashed from $80 to $0.0001 in seven days. HODLers lost everything. No recovery. No second chance. That’s not volatility. That’s total destruction. And it’s not just altcoins. Even Bitcoin has periods where it sits flat for years. Between 2011 and 2015, it traded between $2 and $1,000. If you bought at $1,000 in 2013 and held until 2015, you made nothing. Not even inflation-adjusted. That’s the risk of HODLing: time doesn’t always heal all wounds.

How It Compares to Other Strategies

Day trading? You pay fees every time you buy or sell. On Binance, that’s 0.1% per trade. Do 100 trades? You’ve paid 20% in fees alone. That eats into profits fast. Dollar-cost averaging (DCA) is a middle ground. Invest $100 every week, no matter the price. Over time, you average in. A 2022 study found DCA beat lump-sum buying in 63% of 3-year periods between 2013 and 2022. But when lump-sum won, it won big. Timing matters. HODLing is the opposite of timing. You don’t try to guess. You just commit. An adventurer holds a private key wand before a vault of lost Bitcoin keys, leading to a golden future city.

An adventurer holds a private key wand before a vault of lost Bitcoin keys, leading to a golden future city.

What the Experts Say

Michael Saylor, CEO of MicroStrategy, bought over 157,000 Bitcoin. He calls it digital gold. He’s HODLing for the long haul. Nobel Prize winner Paul Krugman calls it a "greater fool theory." He says there’s no intrinsic value. Someone else has to pay more later. ARK Invest’s Cathie Wood thinks Bitcoin could hit $1 million by 2030. JPMorgan says $35,000 is fair value based on gold’s market cap. The CFA Institute says HODLing might be okay for 2-5% of your portfolio. Anything more? Too risky.

Is HODLing Right for You?

Ask yourself: - Can you sleep if your portfolio drops 50%? - Do you understand that your crypto has no dividends, no earnings, no cash flow? - Are you prepared to lose it all if a regulation changes or a coin collapses? - Do you have the discipline to ignore the noise? If you answered yes to all four, HODLing might work for you. If you’re looking for quick profits? Don’t HODL. Trade. If you want stability? Stick to stocks or bonds. If you believe in the future of decentralized money? Then HODLing could be your best bet.

What’s Next for HODLers?

The 2024 Bitcoin halving cut new coin rewards in half. Historically, that’s led to bull runs. After the 2020 halving, Bitcoin rose over 1,000% in 18 months. This time, it might be quieter. More institutions are involved. Less speculation. More adoption. Fidelity now lets you hold Bitcoin in IRAs. BlackRock filed for a Bitcoin ETF. Coinbase reports that 78% of users hold multiple coins. Diversification within crypto is becoming the new HODL. But don’t ignore the risks. Bitcoin uses more electricity than Greece. Regulators in the U.S. and EU are watching closely. Environmental and legal pressures are real. HODLing isn’t a get-rich-quick scheme. It’s a long-term bet on technology, scarcity, and human behavior. Some will make fortunes. Others will lose everything. There’s no middle ground. The question isn’t whether HODLing works. It’s whether you can live with the consequences if it doesn’t.

Is HODLing crypto still a good strategy in 2025?

Yes, but only if you understand the risks. HODLing worked for early Bitcoin investors because the market was small and growth was explosive. In 2025, the market is bigger, more regulated, and more complex. Institutional money is in. Halvings have less impact. The strategy still works for those who believe in long-term adoption-but it’s no longer a guaranteed path to wealth. Diversifying across multiple coins and using staking for yield is now part of modern HODLing.

Can you HODL crypto without a wallet?

No. If you leave your crypto on an exchange, you don’t truly own it. The exchange holds the keys. If the exchange gets hacked, goes bankrupt, or freezes withdrawals (like FTX in 2022), you lose everything. True HODLing means using a non-custodial wallet-like Ledger, Trezor, or a software wallet you control. You’re responsible for your private keys. No one else can recover them for you.

What happens if I lose my private key?

Your crypto is gone forever. There’s no password reset, no customer support, no recovery option. About 3.7 million Bitcoin-worth over $120 billion-are estimated to be lost this way. That’s why writing down your recovery phrase on paper and storing it in a safe place is non-negotiable. Digital backups can be hacked. Paper is your best bet.

Does HODLing work for altcoins like Ethereum or Solana?

It can, but it’s riskier. Bitcoin has proven resilience. Altcoins are more speculative. Ethereum survived the 2022 collapse and transitioned to proof-of-stake. Solana had a major network outage in 2022 and lost over 80% of its value. If you HODL altcoins, you’re betting on their technology, team, and adoption-not just scarcity. Stick to established coins if you want to minimize risk. Newer coins? Only allocate what you can afford to lose.

Is HODLing better than dollar-cost averaging (DCA)?

It depends on your goals. DCA reduces the risk of buying at the top. It smooths out volatility. HODLing (lump-sum) gives you the best returns if you buy at the right time. But timing the market is nearly impossible. A 2022 study showed DCA outperformed lump-sum in 63% of 3-year periods. But when lump-sum won, it won big. Most people benefit from combining both: DCA in, then HODL.

Can you HODL crypto and still make money from staking?

Yes, and you should. Staking rewards are passive income. Ethereum, Cardano, Polkadot, and others pay 3-7% APY just for holding and validating transactions. This turns HODLing from a speculative bet into a yield-generating strategy. Just make sure you’re staking through a trusted platform like Coinbase or a hardware wallet that supports staking. Avoid unknown protocols-they can be scams or fail.

What’s the biggest mistake HODLers make?

Putting too much money into crypto. Experts recommend allocating no more than 2-5% of your total portfolio. Crypto is volatile, unregulated, and unpredictable. If you HODL 50% of your savings, a single crash could wipe out years of work. Treat it like a high-risk bet-not your retirement fund.

Will regulations kill HODLing?

Possibly, but not entirely. Governments can ban exchanges, restrict staking, or tax holdings heavily. But they can’t shut down decentralized networks. Bitcoin still runs. Ethereum still works. HODLing as a concept survives because it’s peer-to-peer. The risk isn’t the tech-it’s the legal environment. Stay informed. Avoid holding crypto in jurisdictions with hostile laws. Use reputable platforms that comply with regulations.