Nobody Has Ever Lost Money Holding Bitcoin Six Years

Nik Bhatia (0:00)

I often get asked, what is the best way to introduce Bitcoin to new investors? My answer is always the same. It comes down to returns. And in today's video, I'm going to show you Bitcoin's incredible outperformance relative to three other asset classes, stocks, bonds, and gold.

Welcome back to The Bitcoin Layer. I'm Nik Bhatia. In today's charts, I'm going to show you this outperformance. We'll start with Bitcoin's trailing five-year performance versus stocks, bonds, and gold. Now, over this time horizon, if you started with $100, you would have turned that into $154 with Bitcoin. So that 54% increase, but again, that's over five years. That trails stocks at 77%, which also trails gold at 134% over that time horizon. US. Treasury is getting crushed, of course, as interest rates have gone from near 1% to above 5%, approximately over that time horizon. But forget the total return over that time horizon. I want to show you now compound annual growth rates. These are those annualized performance numbers that people are used to, that expectation that if you hold stocks, you're going to make somewhere in the 10% to 15% per year.

Going back over the last two to three decades, gold has actually challenged and beaten the stock market over some of those time horizons. So gold, putting in a great performance really since the early 2000s versus the stock market. But those annualized returns are tiny compared to Bitcoin's historic returns. That is how I find it easiest to explain to people what Bitcoin has the power to do, which is change their portfolio for the better. Let's look at the compound annual growth rates or CAGR over three years, five years, seven years and ten years to show you the power of Bitcoin. Starting with the three-year time horizon, Bitcoin doing very well, 44% compound annual growth rate. That beats gold, which has gone up 31% per year for the past three years and stocks 22%.

Now, this is a very fortunate time horizon that we've picked trailing three years because three years ago from October 26, you were in October 23 That is when the United States judicial system essentially put Bitcoin ETFs on the map. The SEC was defeated by Grayscale in a landmark case that set the pace for Bitcoin ETFs to be approved in January of the following year. iBit from BlackRock went on to be the most successful ETF launch in history. So Bitcoin up 44% per year since that October of 23 and beaten materially the two other asset classes, I'm not including Treasuries, of course, anywhere in the last five years when you're looking at returns. It just it won't even compare because of those rising interest rates. Looking at the last five years, now Bitcoin losing out to gold and stocks over that time horizon because five years ago, you were in October of 21

That was during a bull market, but Bitcoin essentially, I shouldn't say unchanged because for Bitcoin up 54% is still material and it's nothing to snub your nose at, but we have 9% compound annual growth rate since that October of 21 area, gold and stocks performing better than Bitcoin. But this is where then once you get past five years, Bitcoin really starts to separate itself. And I have a very interesting chart to show you that type of holding period and where you can expect the material outperformance going backwards. Now, I know that historical returns are not a promise for future returns.

And I also do believe that Bitcoin's compound annual growth rate will decline over time. But that decline in CAGR for Bitcoin, it should be expected and it should also be a return, let's say, going out the next 10 years, that I believe will continue to outperform an asset class like US stocks. Now, here's that graphic. It's called the HODL cave. It's inspired by Unchained. And this is showing you holding periods here on the x-axis. So this is not a time series. Left to right, you see how long one has held Bitcoin. And up and down on the y-axis, the multiple on the return and this dotted line is no change. So what does this mean? In a two-year time horizon, part of the holding period, or sorry, part of the contingent that held for two years lost money below. Some of the people made money, and this median returned somewhere in the 3, 5, 6, x return, not percent, but multiples of your holding returns. Sorry, you're holding your initial capital. Now, Bitcoin, of course, in its early years did wild multiples from 2011 to 2013, going from single digits to $1,000. That early price history is within this data, but it also includes data up until essentially when we took this chart this week here in October of 2026 So you move out to five years and you analyze what if you've held Bitcoin for five years, what's the distribution of returns for those people? And you could see that barely anybody has lost money. And this little tail here below zero are people that bought in November of 2017 when Bitcoin was almost at 20,000 in a massive 27 bull market, 2026, sorry, 2017 bull market, and then sold in November of 2022 after a huge bear market and the FTX washout when Bitcoin went below $17,000.