Thanks to the power of compounding returns, Bitcoin has minted over 145,000 millionaires.

While Bitcoin has been a top performer over the past decade, it is prone to dramatic drawdowns every few years.

Buying and holding for a minimum of five years is the optimal strategy for Bitcoin investors.

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Taking a long-term approach to crypto investing can pay off big. There’s no better proof of this than Bitcoin (CRYPTO: BTC), which has been a stalwart market performer for more than a decade now.

According to the latest Crypto Wealth Report from Henley & Partners, there are now over 145,000 Bitcoin millionaires in the world right now. These investors have patiently held on to their Bitcoin through market ups and downs and have been richly rewarded.

The secret to Bitcoin’s success is the power of compounding returns. Even a relatively modest initial investment can grow into a huge nest egg if allowed to compound over a long enough period of time.

In eight of the past 10 years, Bitcoin has been the top-performing asset in the world. In many of those years, Bitcoin has delivered triple-digit returns. So it’s not just that an initial investment is compounding over time. It’s literally doubling in value each year.

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Just a little back-of-the-envelope calculation will demonstrate how powerful this can be over a 10-year period. Let’s say you decide to invest $1,000 in Bitcoin today and this investment doubles every year for the next decade. By the end of that time period, you would have more than $1 million in your portfolio.

This almost seems too good to be true. And, in some ways, it is. That’s because Bitcoin has historically been prone to boom-and-bust cycles. Every four years, it tends to suffer a cataclysmic collapse.

In 2022, for example, Bitcoin lost 64% of its value. And in 2018, Bitcoin lost 74% of its value. In those two years, Bitcoin was actually the worst-performing asset in the world, and it wasn’t even close.

So, in many ways, you’re counting on the really good years from Bitcoin to bail you out later. For example, right after Bitcoin lost 64% of its value in 2022, it went on an epic rally that saw it gain 157% in 2023 and 125% in 2024.

That’s why a patient, buy-and-hold approach to Bitcoin is so critical. Among Bitcoin investors, there’s even an entire lexicon that has developed around this notion. You don’t just hold Bitcoin: you HODL (hold on for dear life) Bitcoin. You never, ever sell your Bitcoin if you have diamond hands.