Down on your Bitcoin investment? Make sure you do

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Bitcoin (BTC -0.41%) has only been around for just under 14 years. Yet during that time, it has gone from a speculative asset meant to be used only by criminals to one owned by Fortune 500 companies, billionaires, and even country governments. His rise has been nothing short of spectacular and, in my opinion, historic.

Despite this success, Bitcoin and its investors are once again at a crossroads as the cryptocurrency has lost over 75% of its value since hitting an all-time high of just under 70,000. $ in November 2021.

While this may alarm potential investors and those who may have bought at or near the top in 2021, there is still a positive pattern and phenomenon that has held true since Bitcoin’s inception: those who buy and hold long term earn the most. .

You may have already seen articles and charts that show Bitcoin is no stranger to declines like this year. Past bear markets have caused Bitcoin to lose up to 90%, yet it has remained resilient and rebounded. While this may be reassuring, new data has emerged that may further reinforce the importance of holding Bitcoin for the long term.

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Even though Bitcoin is a relatively new asset, past data is still useful to give investors perspective. And nothing could give investors more perspective than that – on average, every bitcoin held for at least 210,000 blocks, or around four years, has produced at least a 100% return.

Every four years Bitcoin undergoes a phenomenon known as a halving, and the time between each halving is called an epoch. When a halving happens, it halves the reward Bitcoin miners receive, reducing the rate at which new bitcoins come into circulation. So far there have been four eras and three halves (November 2012, July 2016, and May 2020). Originally, the miner’s reward was 50 bitcoins, but since then it has dropped to just 6.25 bitcoins and will drop to 3,125 in May 2024.

Now that you have a better idea of ​​why halvings are so important, let’s dig into some data.

The numbers don’t lie

Unfortunately, I can’t show you the chart published in BTC Times, so you’ll have to take my word for it.

The data I uncovered shows that in its entire history, if someone bought bitcoin, no matter the amount, and waited to sell until 210,000 blocks or four years had passed, the return always went was greater than 100%. I know most people are visual learners, but an explanation might help paint the picture.

Let’s say you bought Bitcoin at block 136,375 in time three (December 31, 2018) when its price was only $3,740. Suppose you waited for 210,000 blocks to pass or about four years, and you sold that bitcoin at block 136,375 in time four (December 7, 2022). Because the price of Bitcoin was $16,838 at that time, that means you would have a 350% return even after the recent drop.

Maybe another example would help, but this time let’s look ahead. Let’s say you bought Bitcoin at the time of this writing when its price was around $16,900 and at block 138,100 at the current time. The data implies that, based on past trends, the price of Bitcoin at block 138,100 in the next epoch (which would be around four years from now) would be worth at least $33,800 – a return of 100%, if not more. This would certainly exceed the historic stock market return of 11% per year.

This is just one example, but the data shows that this trend has occurred for every Bitcoin purchase in every block in history for every era. I may be biased, but it’s just amazing.

Consistent Discipline Over The Long Term Wins

The purpose of showing this data is not to trick you into trying to time the market. Rather, the goal here is to show that Bitcoin rewards investors who maintain a long-term time horizon. Our analysis here has broken down the returns from one era to the next, roughly four years. Imagine if you had lasted for two or three epochs. The returns would be monumental.

Even with the recent price decimation in 2022, this trend is still true. If this persists, this could be one of the most opportunistic times for investors to add Bitcoin to their portfolio while prices are low. If you have bought Bitcoin in the past and are currently at a loss, I urge you to be patient and keep holding on. And if you are one of the privileged few who have held Bitcoin for multiple eras, congratulations and good luck.

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