jakiro
As we all know, BTC is a zero-interest asset.Therefore, long-term holders who stock up on BTC are usually only able to pay attention to the rise in the price of BTC itself.However, if your BTC position has a compound annual growth rate of CAGR in the past five years, which is the so-called CAGR of 30%, does this represent the true yield of BTC?Below are some of the views of netizens @AdamBLiv and others. The compilation of the teaching chain is here for the benefit of all readers.
How to calculate the real benefits of BTC?If you can’t beat the printing machine, your income is false.$1 million BTC looks beautiful, but purchasing power is the real test.
Here is how to calculate your real BTC gains:
Although rising prices are certainly gratifying, the key is to improve purchasing power.
The rise in the BTC dollar price only makes sense if its real returns outperform the dollar dilution speed.
Nominal benefits are used to show off, and real benefits are what you can truly enjoy.
Real returns are inflation-adjusted nominal returns, which tells you how much more you can actually buy.
When thinking about macroscopically, please use a more accurate measurement scale than CPI.
Keep track of the expansion rate of the currency you are denominated.
The US broad money supply M2 has soared from about US$4.7 trillion in 2000 to more than US$22 trillion in March 2025 – an annualized compound growth rate of about 6% to 7%, and was accompanied by a sharp peak of fluctuations.
If your asset’s CAGR fails to surpass this currency torrent, then the so-called “return” is nothing more than a mirage.
A thinking model that breaks self-deception:BTC real annualized return ≈ BTC nominal return – currency expansion rate.
When BTC grows at an annualized rate of 15%, while the dollar pool expands at a rate of 7%,Your real income is only about 7% to 8%, not 15%.
This is to apply the Fisher effect to the growth of money supply,And not just the thinking paradigm of CPI inflation.
Use simple calculations to burst the bubble hallucination:
The starting price of $100,000 is shouting “2028 BTC $200,000”, which means an annualized growth rate of about 14.9%.If the growth rate of M2 currency remains at 6% to 8%, your real annualized return is only about 7% to 9%.
Although it is good, it is far from the crazy feeling of seeing six minus.
“BTC $1 million in ten years” sounds legendary.However, if discounted for ten years at a broad currency growth rate of 6% to 8%, the actual purchasing power is only equivalent to the current level of US$558,000 to US$463,000.
Once the dilution effect of the valuation unit is considered, the zeros after those numbers lose their weight.
Target settings for mature investors:
Your benchmark rate of return should not be “outperforming the S&P 500”, but rather to surpass the speed of currency expansion with significant advantages while overcoming personal tax drags.
Nominal income is just a marketing rhetoric, and real income is the way to survive.
Measure progress with really important yardsticks: purchasing power baskets, energy, high-skilled labor hours, land area, quality calories – not just how much dollars each coin is worth.
This is crucial for BTC diamond players who plan to hold for a long time and cross the $200,000 mark: the fundamental meaning of BTC is to get rid of the hamster running wheel imposed on you by fiat currency (meaning exhausted from running).
If your valuation unit loses at a rate of 6% to 8% for a long time, then the nominal price target is only half a sentence.The second half of the sentence should be: “Have I increased my share of scarce commodities and precious time?”
If the answer is no, the zeros behind those numbers are nothing more than a false carnival.
Sure, you can cheer for $200,000 and celebrate $1 million, but then ask that mature question immediately:What is my real annualized income after the dollar supply expands?How many real-world units of wealth have I actually obtained?
When BTC rises to $1 million, that will never be the 1 million you imagine today.
The number of digits will increase, but only when the currency torrent is truly outperformed, will the purchasing power increase.
This is the game worth winning.
Netizen @diglloyd commented: “Totally agree. If you don’t think so, you will fall into the classic “my house has three times the value” self-deception…and this actually took 30 years.What’s more difficult is to consider the tax rate factor – for large returns, taxes may easily swallow at least 1/3 of the “benefit”.For example, the federal capital gains tax is 20% + 3% surcharge, and the unlucky Californians like me have to pay a state tax of up to 13%.But at least this is better than the federal tax rate of 28% for gold’s “reward”, which is one of the reasons why investing in physical gold is stupid.So if you invest successfully and are in a place like California, in addition to currency depreciation, you should also consider an additional 36% loss of profit.In the short/medium term, this tax factor is likely to have a greater impact than currency depreciation.”
@AdamBLiv agrees: “Indeed. When you count the currency devaluation and the damn cool work of house maintenance/decoration, the so-called real estate value-added is simply not worth mentioning.Not cost-effective at all!”
Netizen @diglloyd added: “CPI is just a joke, M2 is more reliable.But let me suggest a market-oriented measurement standard?We should take the highest (most expensive) of these indicators.If the nominal yields of MSTR’s STRC, STRK, STRD, STRF and other tools are in the range of 8%-12%, then I think the most realistic depreciation rate should be the value recognized by the market for these tools – that is, the currency depreciation rate of 8%-12%.To be serious, 3% can be subtracted as the estimate of the actual rate of return (about 5%-9%).Personally, based on the goods and services I actually need to buy, I have used 10% as the actual depreciation rate in the past 5 years… and the actual annual depreciation rate of many commodities is even close to 15%.”
Netizen @FabioSi57695354 commented: “The hallucination is not in BTC, but in the US dollar system. The purchasing power of a BTC is far more than ten years ago. Franchise currency needs inflation adjustment because its value is manipulated; and BTC is scarce, mathematical certainty and immutable. The real return is not the number “1 million USD/BTC”, but the purchasing power that continues to grow under a fixed supply of 21 million.”
Netizen @Jasonke81574085 believes: “If you are still using the current system to measure BTC, it means you don’t really understand BTC at all!As Jeff Booth puts it, “The natural state of open free markets is deflationary. When commodity prices approach zero relative to BTC and continue to decline, your wealth is actually growing every year.”
Netizen @retireErrant said: “It’s true. BTC was born to fight currency devaluation – if you can find other equally good “dark horse” assets, I might consider it. But the reality is, we have no choice.”
