HODL mentions on Reddit correspond with extreme crypto volatility
On average, days with the largest cryptocurrency losses had the highest number of HODL comments.
A popular acronym associated with the cryptocurrency industry is HODL, meaning Hold On For Dear Life. Over the weekend, a Reddit user decided to analyze the relationship between how often the term was posted on the discussions platform and overall cryptocurrency market cap volatility. The results were surprising.
The term HODL was originally a misspelling of the world hold. The acronym skyrocketed in popularity online in 2013 and is often used to encourage cryptocurrency traders to avoid the temptation of selling coins when prices begin to fall. However, Reddit user Anthony Xie’s data revealed that this wasn’t the only use for the term.
Xie submitted a research report on the DataIsBeautiful subreddit, exposing an explosion of daily HODL mentions during late 2017 and early 2018, around the same time digital currency prices saw a rapid spike.
Chart: Anthony Xie
However, since early February, the prevalence of the term HODL among Reddit users has been steadily declining. Xie’s stats indicate that daily use of the term has reduced to one fifth (500) of its recent peak (2,800).
Analyzing the figures further, on average, the days with the largest losses had the highest number of HODL comments, which is to be expected. Surprisingly, days with substantial market gains were also associated with a higher number of HODL comments. Less volatile market swings drew lower daily average HODL mentions.
“An increased [number of] HODL mentions weren’t just associated with days with the largest losses,” Xie said in his report. “In fact, market volatility in either direction was correlated with an increase of HODL mentions.”
Chart: Anthony Xie
Despite a flurry of overwhelming online interest in December, cryptocurrency-related terms have seen a sizable drop in Google search popularity in recent months, matching steep price movements over the same period.
A recent report found that almost three quarters of Dutch crypto holders buy coins to make a long-term return.
“This group is also known as ‘hodlers’. The low investment amount and the fact that they are there for the long term is a possible explanation why few owners left during the decline,” according to the research.
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