You can make a lot of money holding Bitcoin, if you can hold through the ups and downs.
If there is anyone familiar with volatility, it's those who hold cryptocurrencies. Specifically, Bitcoin (BTC 0.77%) has been an absolute rollercoaster ride over the years. Bitcoin prices have fallen over 30% from their high twice, and over 60% once, over the past five years alone!
But you'd be pretty happy if you'd bought five years ago and held on for dear life. A $1,000 investment in Bitcoin five years ago will have grown to over $13,000 today.
So, what's the lesson here, and how can investors apply it to Bitcoin moving forward?
Here is what you need to know.
Why is Bitcoin so volatile?
Bitcoin and other cryptocurrencies have some similarities with stocks. For starters, their short-term prices result from supply and demand. Prices go up when more people want to buy than sell, and vice versa. But stocks represent underlying companies -- tangible businesses. They generate profits, and stocks represent ownership of a piece of that.
Cryptocurrency is a bit more complex because there is technically no tangible value to cryptocurrency. That doesn't mean it's worthless. After all, the same could be said about fiat currency. Its value comes from what it represents. In the case of the U.S. dollar, the currency represents a legal tender backed by the government. The dollar's value might fluctuate against other currencies, but the U.S. dollar is generally stable because of that backing. It's the world's reserve currency for that reason.
Bitcoin is decentralized -- no bank or government backs it. Some may argue that this makes Bitcoin and other cryptocurrencies some pyramid scheme, but that's not necessarily true. Decentralization is both a bug and a feature. Bitcoin's still a young asset. It's volatile because it doesn't yet have the widespread adoption fiat money has. But as more people own and transact with it, the more stable the price will likely be.
What drives Bitcoin's long-term value?
Over time, Bitcoin's value goes back to supply and demand, but on a much larger scale. Theoretically, demand for Bitcoin will increase as adoption grows. The more people own and use it, the more people will want it.
It's the supply side of the equation that's interesting. With fiat money like the U.S. dollar, the Federal Reserve controls the money supply. It can increase or decrease, but as you see below, the supply almost always grows. This is measured as the M2 Money Supply, essentially the total number of dollars circulating in the economy.
US M2 Money Supply data by YCharts
The more dollars in the economy, the higher the demand for goods and services, causing prices to rise. Notably, inflation means the buying power of the dollar decreases. In other words, a dollar doesn't buy nearly as much today as it did 50 years ago. Just compare the cost of a house in 1960 to the cost today.
Bitcoin was created with a hard supply cap of 21 million bitcoin. There can never be more than that. Today, there are approximately 19.6 million bitcoins in existence. The last bitcoin will be mined in the year 2140. The idea is that Bitcoin's buying power will increase over time instead of decreasing. Why? Because there will only be so many bitcoins to accommodate ever-increasing demand. That buying power should ultimately drive its value higher.
How should investors buy Bitcoin today?
Volatility makes trying to time Bitcoin and other cryptocurrencies a nearly impossible task. But Bitcoin has continually increased in value over time, just as its creator intended. Despite Bitcoin prices being nearly 30% off their high today and the S&P 500 at an all-time high, Bitcoin has appreciated far more than the broader stock market over the past 10 years.
Investors shouldn't own Bitcoin to speculate, but because they believe in the purpose of Bitcoin and its long-term potential as an alternative to fiat currency.
Bitcoin Price data by YCharts
Consider buying Bitcoin with a dollar-cost averaging strategy. Buy a little at a time, often on a schedule, regardless of the price. Over time, you'll buy some at high and low prices, but it will average out. That way, you don't put all your money in at the wrong time.
Steady purchases and a long time horizon should enable investors to enjoy Bitcoin's success, despite its occasionally violent price swings.
Justin Pope has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
FAQs
But you'd be pretty happy if you'd bought five years ago and held on for dear life. A $1,000 investment in Bitcoin five years ago will have grown to over $13,000 today.
How much is 1 Bitcoin worth 10 years ago? ›
Prices and value history
| Date | USD : 1 BTC |
|---|
| Jan 2009 – Mar 2010 | basically nothing |
| May 2010 | less than $0.01 |
| Feb 2011 – April 2011 | $1.00 |
| Nov 2013 | $350–$1,242 |
38 more rowsAverage returns
| Period | Average annualised return | Total return |
|---|
| Last year | 112.5% | 112.5% |
| Last 5 years | 64.5% | 1,104.4% |
| Last 10 years | 67.6% | 17,355.7% |
The current price of 1000 Bitcoin in US Dollar is 66.61M USD. The price is calculated based on rates on 32 exchanges and is continuously updated every few seconds. To see the latest exchange rate, Bitcoin historical prices, and a comprehensive overview of technical market indicators, head over to the Bitcoin page.
What will $1000 of Bitcoin be worth in 2030? ›
If Wood is correct and Bitcoin does reach $3.8 million by 2030, an investment of $1,000 would be worth over $60,000. This would result in a compound annual growth rate (CAGR) of over 100%. Read Next: Bitcoin has jumped another 45% already this year – how much would you need to get started today?
Which coin will reach $1 in 2024? ›
Conclusion. In the dynamic landscape of cryptocurrency, these ten coins, including TRON, Shiba Inu, Astar, Kaspa, Dogecoin, Stellar, Kava, Polygon, Cronos, and VeChain, present diverse potentials for reaching the $1 milestone in 2024.
How much will I get if I put $1 dollar in Bitcoin? ›
1 USD equals 0.000015 BTC. The current value of 1 United States Dollar is +2.26% against the exchange rate to BTC in the last 24 hours. The current Bitcoin market cap is $1.29T. Create a free Kraken account to instantly convert USD to BTC today.
How much will 1 Bitcoin be worth in 2025? ›
Bitcoin (BTC) Price Prediction 2030
| Year | Price |
|---|
| 2025 | $ 68,167.06 |
| 2026 | $ 71,575.41 |
| 2027 | $ 75,154.18 |
| 2030 | $ 87,000.36 |
1 more rowFor that reason, while current market conditions are favorable for anyone considering buying Bitcoin, it is an asset you should purchase only at your own risk. Because while Bitcoin may have the potential for significant returns, you may also lose most of your investment.
How much is Bitcoin going to be worth in 5 years? ›
Bitcoin Price Prediction 2025-2030
| Bitcoin Price Prediction | Potential Low ($) | Average Price ($) |
|---|
| 2025 | 61,357 | 95,903 |
| 2026 | 82,522 | 115,569 |
| 2027 | 152,837 | 160,942 |
| 2028 | 174,063 | 183,485 |
2 more rowsJun 12, 2024
If this pattern continues into 2030, the price could peak around 2029 or 2030, potentially aligning with Wood's price prediction. If Wood is correct and Bitcoin reaches $3.8 million, a $100 investment in Bitcoin today would be worth $5,510 in 2030. This translates to a compounded annual growth rate (CAGR) of over 95%.
How much to invest in Bitcoin to become a millionaire? ›
While this is a lower-bound scenario, we can use it as a baseline to show what it takes for investors to become Bitcoin millionaires. Assuming an annualized return of 30%, one would need to invest roughly $85,500 annually for five years to hit millionaire status. Over 10 years, this number falls to around $18,250.
Should I put 1000 in Bitcoin? ›
Simply put, a $1,000 investment in Bitcoin today could generate life-changing gains in just a few decades -- but only if you ignore its near-term swings.
Is it smart to invest in Bitcoin? ›
Sarathy concurs that there are risks involved with investing in these cryptocurrencies, including price volatility, cybersecurity concerns and a lack of regulations compared to traditional currency. Ultimately, it's up to each individual user how much risk they want to take.
Is Bitcoin going to skyrocket? ›
Our real-time BTC to USD price update shows the current Bitcoin price as $65,372 USD. Our most recent Bitcoin price forecast indicates that its value will increase by 14.41% and reach $74,789 by June 19, 2024.
Will Bitcoin hit 1 million by 2030? ›
However, some experts have offered bold projections. Cathie Wood, the founder, chief executive officer, and chief investment officer of ARK Invest, believes that Bitcoin could be worth $1 million per coin before 2030, as adoption by institutional investors increases.
What was the price of 1 Bitcoin in 2010? ›
In 2010, bitcoin—the cryptocurrency that had then come into being only a year back—was valued at the average of USD 0.06 or Rs. 2.85. Bitcoin hit a record-high of USD 2,779 yesterday, stunning investors and observers around the world. It has appreciated 150 percent year to date.
How much was 1 Bitcoin in 2009? ›
Bitcoin was originally worth next to nothing. The transaction that first gave Bitcoin monetary value was in October 2009, when Finnish computer science student Martti Malmi, known online as Sirius, sold 5,050 coins for $5.02, giving each Bitcoin a value of $0.0009 each. The exchange took place on PayPal.
How much was 1 Bitcoin in 2011? ›
By June 2011, Bitcoin's price had hit nearly $30, a seemingly unimaginable rise from just months before. And that's where it topped out for the year. Bitcoin spent the remainder of 2011 just dwindling to as low as $2, before finishing the year at $4.70.
How much was 1 Bitcoin in 2012? ›
The closing price for Bitcoin (BTC) in 2012 was $13.45, on December 31, 2012. It was up 185% for the year. The latest price is $64,411.17.
