Definition ∞ Passive holding refers to an investment strategy where individuals or entities acquire and retain digital assets for an extended duration, largely disregarding short-term market fluctuations. This approach prioritizes long-term value appreciation over active trading or market timing. Holders typically believe in the fundamental long-term prospects of the asset and its underlying technology. It minimizes transaction costs and the emotional impact of market volatility.
Context ∞ Passive holding, frequently termed “HODLing” within the crypto community, is a widely adopted strategy reflecting conviction in the long-term value proposition of digital assets. Its prevalence influences market supply dynamics, as a substantial portion of assets is removed from active trading. Discussions often concentrate on the advantages of compounding returns versus the risks associated with extended market downturns.
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