For those of you unfamiliar with the HODL meme, it’s an intentional misspelling of the word “Hold” that is commonly repeated during turbulent periods in the cryptocurrency market.
http://knowyourmeme.com/memes/hodl.
Over time, HODL has become synonymous with investors abating fear, and not selling in times of market despair.
Anecdotally, I’ve noticed a flood of of HODL mentions in the past year. So I decided to analyze every Reddit comment mentioning “HODL” to examine the relationship of HODL vs. the total value of the cryptocurrency market over time (market capitalization).
Here’s what I found:
Late 2017 — Early 2018 was an explosive time for HODL
The HODL meme spiked in popularity in December and January. This corresponded to some very large market losses in the cryptocurrency market.
Originally I thought that if I overlaid the price movement of BTC, a negative price movement would match up perfectly with an increased # of HODL mentions.
I was wrong. It wasn’t just market losses that increased #HODL mentions.
Market volatility increases the # of HODL comments
Both the days with the biggest market losses, along with the days with the biggest market gains saw a higher # of HODL comments on average.
By grouping daily market performance into bins and calculating the average # of daily HODL mentions for each bin, we see the two camel humps of a bimodal distribution form.
The two humps on each side matching both large positive and negative market movements saw much higher # of HODL mentions than the flat, neutral performance area.
The left hump was taller than the right, meaning that on average:
# HODL on losses > # HODL on gains
HODL fatigue in recent months
After February, the # of HODL comments has significantly diminished despite sustained market volatility.
Is HODL a dying meme? Or are investors’ spirits low after a tumultuous bear market in the last few months and simply cannot muster the energy to rally behind HODL as they did before?
When I posted this data on Reddit, it seemed that many who had loved the meme now had nothing but scorn for it.
How can a sane person care so much about HODL?
I made a trading bot called HodlBot that automatically diversifies your portfolio into the top 20 cryptocurrencies by market cap.
Think of it as a long-term crypto-index that you can DIY on your own exchange account.
In a 3 year back-test, the HODL 20 has significantly outperformed Bitcoin.
To get started all you need is a
- Binance Account
- $200 in any cryptocurrency
You can check it out here.
If you want to know how HodlBot indexes the market and completes monthly rebalancing, check out the blog I wrote here.
For the coders that want to see how I fetched Reddit data, continue reading…
Retrieving the Data
After looking around, I found the best way to retrieve Reddit data was from PushShift API. A huge shoutout to PushShift. The person behind this is no less than an internet hero. He has committed to preserving, protecting, and making terabytes of Reddit data available for free. You can support him by donating here.
Comment Schema
API calls & DB Insertion
Counting # HODLs per Day
Historical Cryptocurrency Market Capitalization Data
https://github.com/dylankilkenny/CoinMarketCap-Historical-Prices
Clone this and run crypto_history.py for the time period you want to fetch historical cryptocurrency market cap data for.