Here’s a new tool for weary market participants who have been watching cryptocurrency prices plummet but don’t want to get caught flat-footed when the market finds a bottom.
It was created by Silicon Valley-based cryptocurrency exchange Evercoin, one of a small group of “noncustodial” companies that say they want to give more control to users. PowerHODL capitalizes on Evercoin’s paired wallet and exchange, which the company says allows investors to take positions in cryptocurrencies without sacrificing security.
“This combination creates an opportunity to fish for the market bottom,” Miko Matsumura, Evercoin founder and general partner at gumi Cryptos, tells ThirtyK. “We want to give people a stable, quiet place to stand without missing anything.”
“If we could just stop panicking, we could start reasoning about where the bottom is.”
Here’s how PowerHODL works: An investor picks where she thinks the bottom of the market might be for a particular cryptocurrency – for example, Ripple’s XRP (XRP) at 10 cents. She sets a limit order to buy Ripple at that level, then moves her crypto assets into USD Coin so she’s no longer exposed to market volatility. She does it all from inside the Evercoin wallet, which means she maintains control of her own assets. No coins leave her wallet unless the price target is met.
If Ripple falls to 10 cents, only then is her limit order triggered, she buys Ripple and she moves back into the market. The term PowerHODL is a riff on “HODL,” which is crypto speak for a buy-and-hold strategy that came from a misspelling of the word “hold.”
“With PowerHODLing, you can stay in the safety of you own wallet, but make limit orders while you sleep or mobile [trades] while you’re on the go,” Matsumura says. “That’s where the power comes from.”
Evercoin was developed in part to address market participants’ seemingly conflicting desires to have the liquidity of an exchange and the security of a wallet, which gives users ownership since they hold onto their private keys. Exchanges, through which investors hand over control, have been plagued by security breaches leading to the loss of millions of dollars in cryptocurrencies. Noncustodial exchanges like Evercoin are still centralized, but they match orders through an internal order book rather than managing users’ wallets.
“With the typical exchange today, the word ‘wallet’ is not really what’s going on,” Matsumura says. “Most wallets function more like a bank account,” he adds, where a third party has control. “And, as soon as you send your crypto to third party, you’re back in the matrix.” A wallet is about security, ownership and control. And with Evercoin’s paired wallet and an exchange, “you haven’t lost control,” he says.
With PowerHODL, which is currently being rolled out to Evercoin customers, Matsumura and team want to help address current market dynamics, where some are predicting doomsday for digital currencies, after prices have plummeted since late last year. Bitcoin (BTC) has fallen from a peak of nearly $20,000 late last year to recent levels around $4,290.
“People are in a traumatized mode,” says Matsumura. “If we could just stop panicking, we could start reasoning about where the bottom is. PowerHODL allows you to ease into where that bottom might be.”
He envisions the tool helping market participants go from anxiously watching the price shift in the market each day to a more relaxed state where “you periodically open the app to see if you got a present or not.”
Matsumura says that ultimately tools like PowerHODL may well help to shift the psychology of the market as a whole, leaving it in a much stronger place. “A wallet isn’t the most exciting part of the river,” he admits. “It’s a quiet fishing spot, and stablecoins provide stability. But, at same time, you can maybe catch a few.”