The recent post-election rally in the price of Bitcoin(CRYPTO: BTC) was nothing short of overwhelming. Within a week, Bitcoin rose nearly 30% to a new all-time high of $93,434. And we may just be getting started, as some analysts are now predicting that Bitcoin could be on its way to $200,000 by the end of 2025.
Naturally, all this buzz around Bitcoin is bringing in a lot of new investors who are new to crypto. So if you’re one of these new Bitcoin owners, here’s everything you need to know about its exponential growth potential, in seven easy-to-understand figures.
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If you’re like many investors, you’ve probably dreamed of becoming a crypto millionaire one day. At Bitcoin’s current price of just under $100,000, you would need to own about 10 bitcoins to become a millionaire.
But don’t let sticker shock stop you. People buy fractional Bitcoins, not whole Bitcoins. That’s because each Bitcoin can be divided into 100 million units, known as satoshis (named after Bitcoin’s pseudonymous creator, Satoshi Nakamoto). So just as a dollar can be divided into 100 cents, a Bitcoin can be divided into 100 million satoshis. And that means you can start investing in Bitcoin with just a few dollars.
For much of the past decade, Bitcoin has been one of the best performing assets in the world. This year is no different, with Bitcoin increasing in value by more than 100%. Last year, Bitcoin rose by more than 150%.
These triple-digit returns are not even unusual. Consider that Bitcoin delivered an annual return of 230% during the period 2011-2021. That was by far the best performance of any asset class. For example, technology stocks only achieved an annualized return of 20% during that period.
In cryptocurrency circles, investors like to talk about the growth potential of different cryptocurrencies in terms of whether they can increase in price by a factor of 10, 100 or even 1,000. The goal is obviously to find a fast growing cryptocurrency with 1000x upside potential.
Image source: Getty Images.
Ten years ago, Bitcoin had a thousandfold upside potential. In October 2013, Bitcoin was trading for just under $100, and many thought this was an impossibly high price for a digital asset. Today it trades for almost $100,000. So if you were prescient enough to have noticed Bitcoin’s future growth potential a decade ago, you would have seen a thousandfold return on your investment.
One day that will live forever in Bitcoin history is known as Bitcoin Pizza Day. This was the first recorded time Bitcoin was used in a transaction to purchase physical goods. On May 22, 2010, a computer programmer in Florida agreed to pay 10,000 bitcoins for two large pizzas from Papa John’s(NASDAQ: PZZA).
At the time it seemed like a bargain since Bitcoin was virtually worthless and those 10,000 Bitcoins were only worth about $40. Bitcoin had just launched in January 2009 and no one could have imagined how valuable it would eventually become. Today, those 10,000 Bitcoins would be worth almost $1 billion. That’s some pretty expensive pizza!
The current price for Bitcoin is within reasonable range of $100,000, which would mark another all-time high for Bitcoin. While there is admittedly a certain amount of buzz and speculation pushing Bitcoin higher, there is also a longer-term investment thesis at work here. Bitcoin is becoming an increasingly important part of the global financial system, and this growing adoption on a global scale is helping to push Bitcoin higher.
Cathie Wood of Ark Invest shocked the investing world in 2022 when she predicted that Bitcoin could rise in value to $1 million by 2030. To support her thesis, she created a highly detailed growth model for Bitcoin, showing how user adoption has continued to increase in recent years. some very different areas.
For example, Wood correctly predicted that institutional investors would make Bitcoin an increasingly large part of their overall portfolios. That happened early this year when the new spot Bitcoin ETFs started trading. These ETFs have dramatically reduced the complexity and perceived risk of investing in Bitcoin and unlocked a tsunami of new money.
There’s one more number you need to know as a Bitcoin owner: zero. That’s the number of times you should ever sell your Bitcoin. Part of buying Bitcoin is buying for the long term. And to do that, you have to hang in there for life (HODL).
That’s because the volatility for this cryptocurrency is very high and experiences a dramatic depreciation every few years. Cathie Wood of Ark Invest has documented at least five different periods in Bitcoin’s history when its value has fallen by 77% or more. So be prepared for some turbulence ahead.
Ultimately, Bitcoin’s impressive upside potential sets it apart from other asset classes. While Bitcoin may not reach $1 million in the coming years, it is becoming more mainstream and deserves a closer look in your investment portfolio.
Consider the following before buying shares of Bitcoin:
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Dominic Basulto has positions in Bitcoin. The Motley Fool holds and recommends positions in Bitcoin. The Motley Fool has a disclosure policy.
7 Key Figures for Bitcoin Owners was originally published by The Motley Fool
