When the waiter hands you the check, you probably round up a bit before you calculate the tip without thinking twice. Imagine stuffing that same pocket change into Bitcoin (BTC 1.15%)every single day, then waking up a decade later to find seven figures of capital staring back at you. That's exactly what on-chain analysts observed last year when they discovered a handful of crypto wallets that had quietly turned small, regular buys into life-changing sums of money.
The magic had nothing to do with luck, leverage, already being rich at the start, shady schemes, or buying meme coin lottery tickets. It was ironclad consistency plus an unusual but not Warren Buffett-esque amount of patience that carried the day. Let's see why the same strategy, scaled to as little as $10 a day, could still put today's investors on a similar trajectory.
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Proof from the chain shows that there's real potential
First, let's look at a real example that shows why having a long-term approach to Bitcoin can be a real wealth builder.
One crypto wallet, run by an investor known only as Rego, made daily $30 purchases of Bitcoin like clockwork for seven years, 10 months, and 12 days, eventually swelling the wallet's value past the $1 million mark. Rego's wallet wasn't the only one following the same strategy. Nor were all of the similarly positioned wallets worth more than $1 million.
Nonetheless, this is proof that it is very possible to make large sums of money from buying and holding Bitcoin, and without incurring a significant financial burden on yourself along the way. The approach here is dead simple, and it's called dollar-cost averaging (DCAing).
In a nutshell, DCAing means investing a fixed dollar amount at predefined intervals no matter what the price chart is doing. Over time, the method smooths out volatility and removes emotion from the investing process. Some suggest that DCAing generally leads to lower returns than lump-sum investing, but that doesn't really matter. The idea is that you can gradually invest a far larger amount than you have on hand today, and also that you can do it with full confidence that you aren't accidentally buying the bulk of your coins at the very tippy top of the price chart.
For instance, if you had started on July 31, 2015, and bought just $10 of Bitcoin every day for 10 years, your total out-of-pocket cost would be $36,500. That upside is that your stash would be worth more than $1.8 million now, even accounting for the recent pullback. In the big scheme of things, when you're DCAing, retreats of 5% to 10% do very little to interrupt the bulk of your returns.
The main hidden cost here is psychological. There will be stretches, potentially years long, when your running total might be underwater. The wallets that graduate to millionaire status stick to the script anyway.
Why the next decade could be kinder
Past performance never guarantees future riches, yet today's backdrop looks even friendlier than the one early DCA-ers enjoyed.
Spot Bitcoin exchange-traded funds (ETFs) have racked up more than $55 billion in cumulative inflows, suggesting that there is plenty of institutional demand that did not exist five years ago. At the same time, many companies keep adding coins to their balance sheets, further shrinking the float available for public trading.
Layer on Bitcoin's own programmed scarcity, and the supply side of the equation looks increasingly tight over time. Meanwhile, macro conditions are finally looking more accommodative to growth. The Federal Reserve has already withdrawn guidelines that discouraged banks from holding crypto assets, opening the door for even more balance sheet adoption.
None of this is a slam dunk, nor is becoming a millionaire from buying Bitcoin anything close to guaranteed, despite Rego's results. A liquidity crunch or unforeseen geopolitical circumstances could delay or totally derail the million-dollar Bitcoin portfolio dream. And even after maturing as an asset, this coin still drops 30% in a bad month, which is not something that many investors can tolerate. You need a 10-year horizon at least and the stomach to keep mechanically buying on the way down.
Assuming that you can handle those caveats, the playbook here is refreshingly short:
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Automate purchases so discipline is never optional.
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Move coins to cold storage at least once a quarter to avoid exchange risks.
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Keep fiat currency cash on hand for life emergencies so you're never forced to sell coins at a loss.
If the next decade brings anything like the past, a $10-a-day habit stands a real chance of snowballing into $1 million.
And if it doesn't? You'll still own a slice of an asset that governments, Fortune 500 chief executives, and giant asset managers increasingly treat as digital gold.
