If you invested $100 in Bitcoin in 2012, here’s how much you’d have

Investors love to speculate on the future potential of assets, but they also love to draw the “woulda, coulda, shoulda” of investments they passed on. No other asset seems to generate that kind of retrospective regret more than cryptocurrencies over the past decade. Out of the wide variety of cryptocurrencies, there is one that tends to come first to the minds of concerned investors: Bitcoin (BTC 1.74%).

Due to its notoriety as the first cryptocurrency and also the most valuable by market cap, Bitcoin is probably the cryptocurrency that evokes these feelings the most among investors who wished they bought early. These sentiments may be valid, but Bitcoin’s inherent characteristics help give investors more than just one opportunity to buy.

Scarcity drives value

Thanks to Bitcoin’s programming, the growth in the supply of cryptocurrency slows down over time. There are approximately 19 million bitcoins in circulation today out of the predefined 21 million. With only 2 million or so set to be created over the next 118 years, the price of one Bitcoin has the potential to rise continuously as the dynamics of supply and demand play out.

The primary mechanism that ensures Bitcoin becomes scarce is known as halving. Bitcoin’s code is written so that roughly every four years the reward for mining a Bitcoin is halved. Originally the block reward was 50 bitcoins, but today the reward is 6.25 bitcoins. This means that each block mined puts an additional 6.25 bitcoins into circulation. The next halving will likely happen sometime in May 2024 and will cut the block reward to just 3,125 bitcoins, and this process will continue until 2140 when the last Bitcoin will be mined.

But until that day comes, I think people will continue to wish they had invested in Bitcoin. It is my guess that investors will repeatedly look back and think “if I would have invested in Bitcoin at this time, I would have this amount.”

Hindsight is always 20/20. But whether you invested in Bitcoin at its peak last year or invested in it 10 years ago, one thing continues to remain true: The longer you hold, the more likely you are to reap the rewards.

Numbers don’t lie

The proof is in the data. So let’s have some fun and see how much money $100 would be worth if you would have invested in Bitcoin at the first halving. At the time, the price of Bitcoin was a measly $12. By the time the next halving rolled around in July 2016, when Bitcoin was worth $665, your $100 investment would be worth more than $5,000.

Now let’s say you held on to your original $100 investment until the last halving, which happened on May 11, 2020. At that time, Bitcoin was worth about $8,800. That same $100 investment will now be worth more than $70,000 – an incredible increase of almost 75,000%.

Although we can never time a market nor should we try, if you were to have sold the original $100 in the November 2021 market, your $100 investment would be worth an almost unfathomable $575,000.

If you took a closer look at Bitcoin’s returns around halving events, another pattern should become apparent: the returns produced are significantly less than the previous halving period. From the time between the first and second halving, Bitcoin rose the most in its history, an astonishing 5300%.

From the second halving, when Bitcoin was worth $650, and the third halving at a price of about $8,800, the price increased 1,253%. Even if the percentage return between the third halving and the upcoming fourth halving were to quadruple as it has in the past, that would still represent a 300% return — not bad.

It’s not too late

These numbers may stir up some FOMO (fear of missing out), but if past patterns of Bitcoin’s price continue to play out, then there really is no better time to buy Bitcoin than now. And if you’re looking to maximize your potential upside, you need to do one thing: Hold onto at least one Bitcoin halving.

So if you bought at the peak in November 2021 when Bitcoin was worth almost $69,000, then 2022 has been disappointing. If I can give one piece of advice, it is to hold on until May 2024 and use this time to build your position while prices are low. Finally, one day, your convictions now will be the envy of them in the future.