Bitcoin enthusiasts frequently assert, “Never sell your Bitcoin.” This mantra resounds during market declines to avert panic selling of BTC at losses, as well as during price rallies, where believers consider current prices—no matter how inflated—as insignificant compared to future potential. So, if they claim never to sell, why are they so concerned with its price (oh, they certainly are)?

The Concept of HODL

The term “hodl” has become a fundamental tenet of the hardcore Bitcoin community. It’s a humorous misspelling of “hold” that captures the spirit of the “Never sell your Bitcoin” mindset.

The inception of “hodl” can be traced back to a 2013 post on the Bitcointalk forum by a user named GameKyuubi, who was under the influence. The thread, titled “I AM HODLING,” was a hilariously incoherent outburst amid a drop in Bitcoin prices (and a personal tiff with his girlfriend).

In his post, GameKyuubi confesses to being an inept trader and resolves to retain his Bitcoin instead of attempting to time the market like astute investors.

“You only sell in a bearish market if you’re an experienced day trader or a naive newbie. Those in-between hold. In this zero-sum game, traders can only benefit from you if you choose to sell.”

GameKyuubi’s message resonated widely, igniting a flurry of responses encouraging others to HODL, thus giving life to a meme that endures to this day.

GameKyuubi’s message suggests that while he wasn’t entirely opposed to realizing profits, he simply lacked the understanding of when to convert his bitcoins to fiat. This led him to the decision to hold in order to avoid being “a bad trader.”

Many who adhere to the “Never sell Bitcoin” philosophy don’t interpret it literally. In Reddit discussions, various Bitcoin loyalists disclosed they don’t convert their bitcoins to dollars; rather, they prefer to acquire more Bitcoin and hold it until a significant financial obligation arises. Some might sell BTC for larger expenses like a car, while using minimal amounts for daily needs like rent, keeping the bulk of their assets intact. For them, holding Bitcoin is more beneficial than fiat currency, positioning Bitcoin as a store of value rooted in the belief of long-term price appreciation. Therefore, for this group, Bitcoin’s price remains a vital indicator, even if they haven’t liquidated any holdings for years.

“Never sell Bitcoin to whales”

Whales are major holders of crypto assets, often amounting to millions. In the 2020s, the dynamics of Bitcoin prices have increasingly been influenced by whale transactions. A chart illustrating the correlation between Bitcoin prices and wallet transactions involving over 10,000 BTC resembles mountains reflected in a lake—whenever whale trading surges, prices often drop, and vice versa, establishing an almost inverse relationship.

When considering GameKyuubi’s assertion, “In a zero-sum game […], traders can only take your money if you sell,” we can see a parallel with another popular saying: “Never sell your Bitcoin to whales.” These entities will acquire your bitcoins at any price. However, the likelihood of reacquiring what you sold significantly diminishes as Bitcoin prices rise, and whales generally aren’t quick to sell.

A Proponent of HODL

Michael Saylor of Strategy is perhaps the most prominent advocate of the “Never sell your Bitcoin” doctrine. His company adheres to a “Bitcoin standard,” regularly selling shares and incurring debts to purchase additional Bitcoin. Since 2020, Strategy (formerly MicroStrategy) has accumulated over 500,000 BTC, totaling over 2.5% of the total supply, and Saylor claims he will never part with his Bitcoin. He has even proposed that destroying the keys from wallets containing substantial Bitcoin amounts would be an effective strategy.

Saylor encourages corporations and the U.S. government to embrace this approach and begin stockpiling Bitcoin, asserting that the largest holders of Bitcoin will possess the most influence in the future.

This viewpoint emphasizes that Bitcoin’s price might not be as crucial as simply amassing as much Bitcoin as possible (reflected in sentiments like “we are still early” and “Bitcoin is still undervalued”). This belief is evident in the seemingly unpredictable timing of Strategy’s significant Bitcoin acquisitions, often made on days regarded as “poor” when prices are elevated (for which Saylor humorously earned the title of “one of the worst crypto traders in modern history”). Still, Bitcoin’s price does matter to the company because it affects the valuation of Strategy’s shares (MSTR) and shapes the future of its Bitcoin-focused strategy.

Saylor maintains that if BTC prices were to plummet to $1, he would simply buy every Bitcoin available. Holding one of the largest Bitcoin reserves without any intention to sell raises profound philosophical questions about wealth. However, let’s set that aside for the moment.