The Illusion of Wealth & How to Beat Inflation: A 100-Year Perspective
We tested 30 ideas about how to beat inflation against 100 years of US money supply data, from gold and housing to savings, the S&P 500 and Bitcoin.
Topic
Bitcoin: Fixed Supply vs Expanding Money
Bitcoin produced the highest M2-adjusted return of anything we tested in the series, 275,713x in 16 years, which is why it features in the overview, Part V and Part VI.
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The reason we give for that is structural: its supply is capped at 21 million coins by its code, while the dollar supply keeps growing at an average of 6.56% a year.
It is also the most volatile asset in the research by a distance. One-year holds swung between big gains and steep losses, and it was only over five-year windows that the record became consistent, with Bitcoin beating M2 in 11 of the 12 rolling periods since 2010. The one miss started at the 2018 peak and ended in the 2023 bear market, and it still made 4.0% a year in nominal terms.
- 721,902x Bitcoin since 2010 From its early recorded pricing, as covered in Part V.
- 11 of 12 Five-year windows beating M2 Bitcoin rolling five-year holds since 2010.
- 16.9x Bitcoin from January 2019 Against 1.52x growth in M2 over the same stretch.
Articles on Bitcoin
3 articles from our research on this topic.
Nvidia Stock Prediction & Gold Price Forecast 2030: The Modern Playbook
Our base-case Nvidia stock prediction and gold price forecast for 2030 and 2035, alongside Bitcoin and the Nasdaq, all modelled against money supply growth.
Crypto vs Stocks: Bitcoin & Tech in the Digital Era
We measure Bitcoin, Nvidia, Apple and the Nasdaq against money supply growth to settle crypto vs stocks, and to see how much faster tech built real wealth.
Plain-English definitions
Key terms for Bitcoin
- Fixed supply 21m BTC
- Bitcoin’s code caps the number of coins at 21 million, which is the scarcity the series compares with expanding fiat money.
- Halving
- The roughly four-yearly cut in new Bitcoin issuance. The most recent covered in the series was in 2024.
- Stock-to-flow
- Existing supply divided by new supply each year. A higher number means new issuance is small relative to what already exists.
- Rolling holding period
- Every possible holding period of a set length, such as each five-year window since 2010, rather than one chosen start date.
FAQ
Questions about Bitcoin
Answers drawn from the figures in our research. Educational only, not financial advice.
Is Bitcoin a good hedge against money printing?
On the record so far it has been the strongest one we measured, though the record is short. From its early recorded pricing in 2010 it grew 721,902-fold, and when we indexed everything to January 2019 it rose 16.9x while M2 grew 1.52x, so COVID money printing can’t explain the gap by itself.
Our two reservations are the length of the history, which is 16 years against a century for gold and stocks, and the size of the swings, which is why we only saw the hedge work reliably over five years or more.
Why is Bitcoin’s growth rate falling?
Mostly because it has got bigger. When we charted Bitcoin’s rolling CAGR for Part VI it trended steadily down, and we read that as the asset maturing: $100 to $10,000 is a 10,000% gain, whereas $65,000 to $350,000 is about 438%, even though the second move adds far more money. With the supply fixed and M2 still growing, we expect each halving to lift the floor, but we would be surprised to see the early percentage gains again.
Important information
Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.
Cryptoassets are largely unregulated in the UK, so you are unlikely to have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if something goes wrong. Educational information only, not financial advice. Read our disclaimer.
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