Is Bitcoin Still a Millionaire-Maker? | The Motley Fool (2024)

Over the past 15 years, Bitcoin (BTC 0.81%) has arguably been one of the best investments you could have made. Bitcoin has outperformed every other asset class for more than a decade now, and steep drawdowns in price have led to even steeper rallies. As a result, even a relatively small investment made a decade ago could easily be worth more than $1 million today.

Surely, some of the investors who are moving their money into the new spot Bitcoin ETFs are thinking about Bitcoin's ability to mint millionaires, especially given the new political momentum behind this cryptocurrency. But does Bitcoin still offer millionaire-maker potential to today's investors?

Past performance is no guarantee of future performance

As impressive as Bitcoin's performance has been over the past 15 years, there's no reason to think it can continue forever. From 2011 to 2021, Bitcoin was the best-performing asset in the world, and it wasn't even close. During that period, Bitcoin delivered annualized returns of 230%. The next closest asset class -- tech stocks -- delivered just 20% annual returns.

That's impressive, but for most of that period, Bitcoin was one of just a handful of cryptocurrencies you could have invested in. Ethereum (ETH 0.59%), for example, did not appear until 2015. And many of the top gainers in recent years -- such as Solana (SOL 0.53%) -- did not appear until 2020. Thus, when investors wanted to invest in crypto, they did not have many options, and Bitcoin soaked up any influx of new money.

Currently, though, thousands of different cryptocurrencies exist. Some of them are likely to deliver far superior returns to Bitcoin over the next decade or so. For that reason, I think it's a mistake to extrapolate Bitcoin's future performance based on past performance. The crypto market continues to evolve and change, and Bitcoin will need to evolve and change as well if it wants to remain a millionaire-maker crypto.

In search of the 1,000x crypto

In the world of crypto investing, it's commonplace to refer to certain cryptocurrencies in terms of their upside potential. The least interesting cryptocurrencies are the ones with 10x upside potential. That might seem like a stratospheric return if you're investing in equities, but for crypto investors, 10x upside is a pittance. The real money is made by finding cryptos with 100x or even 1,000x upside potential.

At one time, Bitcoin had that 1,000x upside potential. That helped propelled Bitcoin from a relatively unknown digital asset to a $70,000 digital asset. If you wanted to become a millionaire, that was the time to buy Bitcoin. You could have plausibly turned $1,000 into $1 million with 1,000x returns.

But just do the math now. If Bitcoin is still a 1,000x crypto, that means a single Bitcoin will eventually be worth $70 million. No doubt, you can twist yourself into a pretzel to make the math work, but it's unlikely. At $70 million per coin, Bitcoin would have an implied valuation far exceeding that of the entire S&P 500.

That being said, there's plenty to look forward to for Bitcoin investors. The consensus opinion is that Bitcoin is a no-brainer lock to smash through the $100,000 price level sometime within the next 18 months. Several price forecasts call for Bitcoin to hit $1 million by 2030. But even if Bitcoin hits $1 million in a few years, that's still just 15x upside. You'd still need to invest nearly $70,000 to get to $1 million.

Who wants to be a millionaire?

It's easy to see why you'll need to have realistic assumptions in place if you're thinking of investing in Bitcoin. The days are long gone when you could become a crypto millionaire overnight. Now, it's all about playing the long game and being a patient, buy-and-hold investor. That's the path to building real wealth.