How it works
Two things are worth knowing before you read the output. The first is that this is a compound-interest projection with a Bitcoin label on it: it does not model adoption curves, halving cycles or supply schedules, it models a constant growth rate applied year after year. The second is more important. The annualized return the tool prints is arithmetically identical to the growth rate you typed in — it is not an independent estimate of anything. Enter 30% and the annualized return is 30%; enter 12% and it is 12%. The calculator therefore cannot tell you whether your growth assumption is reasonable. All it can do is show you what the price path looks like if the assumption turns out to be true, and that is a genuinely useful thing to see, provided you understand that is all you are seeing. The mechanics are three multiplications. Bitcoin purchased = investment ÷ current price. Future price = current price × (1 + growth) to the power of years. Portfolio value = Bitcoin purchased × future price. Everything else on the page is derived from those. Worked example on the defaults, which are $10,000 invested at a current price of $40,000 with 30% assumed growth over five years. Bitcoin purchased = $10,000 ÷ $40,000 = 0.25 BTC. Future price = $40,000 × 1.3^5. Since 1.3^5 = 3.71293, that is $148,517. Portfolio value = 0.25 × $148,517 = $37,129. Total return = ($37,129 − $10,000) ÷ $10,000 = 271%, and the annualized figure is 30% because 1.3^5 raised to the power of one-fifth is exactly 1.3. Now change one assumption. Drop the growth rate from 30% to 20% and the future price becomes $40,000 × 1.2^5 = $40,000 × 2.48832 = $99,533, giving a portfolio of $24,883 and a total return of 149%. Hold 30% but extend the horizon from five years to ten and the price becomes $40,000 × 1.3^10 = $40,000 × 13.7858 = $551,434, with a portfolio of $137,858 and a total return of 1,279%. Ten percentage points of growth assumption, or five extra years, moves the answer by more than a factor of three — which is the honest lesson of the tool. The projection is far more sensitive to the rate you type than to anything the calculator measures. The drawdown question is the one the projection cannot show you and the one that decides whether you can actually hold the position. Bitcoin fell roughly 77% from its peak near $69,000 in November 2021 to a trough near $16,000 in November 2022. Apply that shape to the five-year projection above: a 70% fall from $148,517 is $44,555, and 0.25 BTC is then worth $11,139 — about 11% above the $10,000 you put in, after five years and a projected gain of 271%. A 75% fall puts the same position at $9,282, below cost. That is the real risk profile of the asset the growth rate is being applied to, and it is why position sizing matters more than the growth assumption. Supply is capped at 21 million coins by the protocol itself, with new issuance halving roughly every 210,000 blocks, about every four years; the calculator models neither, so a long horizon in this tool implicitly assumes the price effect of that schedule without showing it. Tax is also outside the model. The IRS treats virtual currency as property rather than as currency, so a disposal is a capital event: held more than a year it is long-term, held less it is short-term, and US brokers have reported spot disposals on Form 1099-DA since the 2025 tax year. The IRS guidance is at irs.gov. Fees are outside the model too — a spot Bitcoin ETF carries an expense ratio in the region of 0.19% to 0.25% for the major US products approved in January 2024, and self-custody carries its own costs in hardware, time and the risk of losing keys. Finally, note what is absent: Bitcoin has no native yield. There is no staking return to add, unlike proof-of-stake networks, so any projection that credits Bitcoin with a staking yield is simply wrong.
Formula
BTC purchased = investment ÷ current price
Future price = current price × (1 + growth) ^ years
Portfolio value = BTC purchased × future price
Total return % = (portfolio value − investment) ÷ investment × 100
Annualized return % = (portfolio value ÷ investment) ^ (1 / years) − 1
→ algebraically equal to the growth rate you entered
Worked example — $10,000 at $40,000/BTC, 30% growth, 5 years
BTC purchased = 10,000 ÷ 40,000 = 0.25 BTC
Future price = 40,000 × 1.3^5 = $148,517 (1.3^5 = 3.71293)
Portfolio value = 0.25 × 148,517 = $37,129
Total return = (37,129 − 10,000)/10,000 = 271%
Annualized = 3.71293^(1/5) − 1 = 30% (= the input)
Sensitivity
20% growth, 5 years → 40,000 × 1.2^5 = $99,533 → portfolio $24,883 (149%)
30% growth, 10 years→ 40,000 × 1.3^10 = $551,434 → portfolio $137,858 (1,279%)
Drawdown check on the 5-year 30% case
−70% from $148,517 = $44,555 → 0.25 BTC = $11,139 (still above cost)
−75% from $148,517 = $37,129 → 0.25 BTC = $9,282 (below cost)
Tips
- Read the annualized return output as a mirror, not a forecast. It equals the growth rate you typed, so the only assumption in the model is the one you supplied. Write that number down before you look at the result.
- Size the position by what a 75% drawdown would do to your net worth, not by what the projection says it will be worth. Bitcoin has fallen more than 70% twice in the last decade, and the projection compounds an optimistic rate on an asset that does that.
- Model the after-tax outcome before you commit. A five-year horizon implies long-term capital gains rates, but a shorter one does not, and rebalancing or taking profit inside a year converts the gain to ordinary income.
- If you want exposure without custody risk, compare the spot ETF route against self-custody on total cost — expense ratio, spread, and the operational risk of holding keys — rather than on price projection alone.
Frequently asked questions
- Is the annualized return output an independent estimate?
- No, and this is the most important thing to understand about the tool. The annualized return is computed as (portfolio value ÷ investment)^(1/years) − 1, and because the portfolio value is itself derived by compounding your growth rate, the two cancel: the annualized return is mathematically identical to the growth rate you entered. It carries no information you did not supply. The projection is a way of visualising the consequence of an assumption, not a source of evidence about Bitcoin.
- What growth rate should I assume for Bitcoin?
- There is no defensible single answer, and this tool will not give you one. Bitcoin has produced very high annualised returns over multi-year windows since 2010, but it has also produced 70%+ drawdowns in 2014, 2018 and 2022, and its realised return over any window shorter than about four years is dominated by where in the cycle you bought. The honest use of the calculator is to run 0%, 10% and 30% side by side and ask whether the low case is survivable. If a 0% outcome over ten years would be a financial problem, the position is too large regardless of what the projection shows.
- Does the calculator model the 21 million supply cap or the halving cycle?
- No. The model is a constant growth rate compounded annually, so it contains no supply schedule at all. Bitcoin issuance is capped at 21 million coins by the protocol and new issuance halves roughly every 210,000 blocks, which works out at about every four years. A long horizon in this tool implicitly assumes the price effect of that schedule without showing it to you, and it equally assumes that demand grows smoothly, which is not how crypto markets have behaved. Treat any horizon longer than about four years as outside what this model can support.
- How is a Bitcoin gain taxed in the US?
- Virtual currency is treated as property, not as currency, so selling at a profit is a capital gain rather than ordinary income. Held for more than a year the gain is long-term and taxed at long-term capital gains rates; held for a year or less it is short-term and taxed at ordinary income rates. Since the 2025 tax year US brokers have reported spot digital asset disposals on Form 1099-DA. The IRS guidance is at irs.gov/businesses/small-businesses-self-employed/digital-assets. The calculator models none of this, so the projected portfolio value is a pre-tax figure.
- What percentage of my portfolio should be in Bitcoin?
- This tool takes no position on that, and no calculator can, because the answer depends on your ability to lose the entire position without changing your plans. A common framing is to treat crypto as a satellite holding sized so that a total loss is annoying rather than destabilising — for many people that means a single-digit percentage of investable assets. The useful test is not a percentage but a scenario: if this position went to zero tomorrow, would you still be able to fund retirement on schedule? If not, it is too large.
- What happens to the projection if Bitcoin falls 70%?
- Run the default case: $10,000 becomes 0.25 BTC, and the projection puts the price at $148,517 after five years. A 70% fall from that projected price leaves $44,555, so the position is worth $11,139 — only about 11% above the original $10,000 despite a projected gain of 271%. A 75% fall leaves $9,282, below cost. Bitcoin fell about 77% between November 2021 and November 2022, so this is a historical shape rather than a hypothetical one. The projection and the drawdown are not alternatives; both are properties of the same position.
- Does Bitcoin pay staking or yield that I should add?
- No. Bitcoin uses proof of work, so there is no staking mechanism and no native yield — holding BTC produces nothing. Staking returns belong to proof-of-stake networks such as Ethereum, which is a different asset with a different risk profile and a different tax treatment for the rewards. If you have seen a projection that credits Bitcoin with a staking yield, or with a lending yield from a custodial platform, that is either a different asset or a credit-risk exposure to the platform rather than a property of Bitcoin itself.