Is it possible to turn a $5000 cryptocurrency investment into a cool $5 million in just 5 years?
That would sound like an incredible achievement. Maybe you’re skeptical.
So was I. Until I sat down and examined the idea more closely.
And in this article I’m going to explain why it’s perfectly do-able.
So first of all, what is it exactly that we are aiming to do?
We want to turn an initial investment sum of $5000 into
$5 million over 5 years through compounded active investment trading in cryptocurrencies. Mainly – but not entirely, through Bitcoin investment.
That would represent a total percentage increase in value of 10,000% over that five-year period.
If we were investing solely in Bitcoin, then we would need to experience a 10,000% increase in the Bitcoin price during that time.
However, if we actively trade a mixed portfolio of cryptocurrencies using Altcoin/Bitcoin pairs then we can get the benefit of gearing in our Bitcoin portfolio value and this can make it possible to achieve this goal with a lower Bitcoin price appreciation than 10,000%.
But for the purpose of simplification let’s just assume we are trading solely in Bitcoin.
This would mean that the price of Bitcoin would have to increase from the level of around $3500 as it was at the end of the first quarter of 2019 to $350,000 by 2024.
So first of all, let’s see how that would compare with the actual past price history of Bitcoin.
Since the creation of Bitcoin in 2009 to early 2019, Bitcoin has seen the following price development:
YEAR BTC PRICE IN $ USD
2009 0.0001
2010 0.07
2011 15
2012 7
2013 100
2014 600
2015 220
2016 2200
2017 12000
2018 7000
2019 3500 (1st Qtr)
Bear in mind that these are approximate figures only, and they are for the mid-year period, and not for a specific date.
This is the Bitcoin percentage price movements year on year since 2009:
Annual mid-year to mid-year BTC price change
2009-2010 70,000%
2010-2011 21,400%
2011-2012 -50%
2012-2013 1,420%
2013-2014 600%
2014-2015 -64%
2015-2016 1,000%
2016-2017 540%
2017-2018 -42%
2018-2019 -50%
We can see that the total value appreciation of one Bitcoin from 2009 to early 2019 has been from $0.0001 to $3500.
That represents some 3,500,000,000% (3.5 billion percent) - an amazing rate of appreciation by any standard.
However the fact is that the period from 2009 to 2011 was an exceptional situation. Bitcoin was a completely new concept and was appearing on the scene for the first time.
Just so we don’t risk over-skewing our results, let’s skip over that period and start our analysis from mid-2011 instead.
This gives us an increase in value of around 23,300% - which still represents an exceptionally good rate of appreciation on capital.
Next, let’s analyze some of the 5 year periods in Bitcoin’s history so far. Again, we’ll start our analysis from mid 2011 so we don’t skew the data results.
Here are some 5 year periods in Bitcoin’s history:
2011-2016 14,600%
2013-2018 7,000%
2014-2019 600%
From this we notice that Bitcoin has seen some truly spectacular price appreciation.
But it needs to be borne in mind that while all these three 5 year periods have experienced saw excellent price appreciation, there were also major price crashes in individual years.
The latest of course was the severe bear market in 2018 which saw severe falls in cryptocurrency prices throughout the sector. The Bitcoin price fell by around 70% compared to 2017.
Price fluctuations year-on-year also tend to be irregular and volatile. At least four years in the last decade have experienced substantial falls in price.
However, the long term trend is still upwards. Giovanni Santostasi, a university professor, has researched this phenomena and produced a best-fit logarithmic graph showing Bitcoin’s long term price development trend since 2009.
The graph shows that notwithstanding the substantial price fallbacks that frequently occur, Bitcoin has always recovered and then gone on to reach higher levels. So in other words the long-term logarithmic trend for the price of Bitcoin to rise still holds true.
Which is good news indeed for long term investors.
So while turning $5000 into $5 Million within 5 years can’t be guaranteed and will almost certainly be no easy task, the history of Bitcoin to date does show that this target is at least theoretically achievable.
If you're interested in reading more about this concept, see my blog post which examines this investment scenario in more detail at https://www.breakfreerebel.com/latest-posts/can-you-really-make-5-million-in-five-years/
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