How to calculate the real yield rate of BTC

As we all know, BTC is a zero-yield asset. Therefore, long-term holders of BTC usually can only follow the rise in BTC's price itself. However, if your BTC position had a compound annual growth rate (CAGR) of 30% over the past 5 years, does this represent the true yield of BTC? Below are some opinions from netizen @AdamBLiv and others, compiled by Jiao Chain for the readers.

How to calculate the real returns of BTC? If you can't outpace the money printer, your returns are just fake. A million dollars worth of BTC looks great, but purchasing power is the real test.

The following is the method to calculate your real BTC earnings:

The rise in prices is certainly pleasing, but the enhancement of purchasing power is the key.

The rise in BTC's price in USD only makes sense when its real returns outperform the dilution rate of the dollar.

Nominal gains are for showing off, while real gains are what you can truly enjoy.

Real returns are nominal returns adjusted for inflation, which tells you how much more you can actually buy.

When thinking macroeconomically, please use a more precise measuring stick than CPI.

You need to track the expansion rate of the currency you are pricing.

The broad money supply M2 in the United States has surged from about $4.7 trillion in 2000 to over $22 trillion by March 2025—a compound annual growth rate of about 6% to 7%, accompanied by significant volatility peaks during this period.

If the annual compound growth rate (CAGR) of your assets fails to surpass this currency flood, then what is called "profit" is merely a mirage.

Breaking the self-deception thinking model: BTC real annual return ≈ BTC nominal return rate - currency expansion rate.

When BTC grows at an annualized rate of 15% and the dollar pool expands at a speed of 7%, your real return is only about 7% to 8%, not 15%.

This is the paradigm of applying the Fisher effect to the growth of the money supply, not just CPI inflation.

Burst the bubble illusion with simple calculations:

Starting from a price of $100,000 and calling out "BTC $200,000 in 2028" implies an annual growth rate of about 14.9%. If the M2 money supply growth rate remains between 6% and 8%, your real annual yield would only be about 7% to 9%.

It's good, but it is far from the kind of crazy feeling you get when you see six zeros.

"In ten years, BTC will be worth 1 million dollars" sounds legendary. However, if we discount it over ten years at a broad money growth rate of 6% to 8%, the actual purchasing power would only be equivalent to today's levels of 558,000 to 463,000 dollars.

Once the dilution effect of the valuation unit is taken into account, the zeros behind those numbers lose their weight.

Mature investors' goal setting:

Your benchmark return should not be to "beat the S&P 500," but to significantly outperform the rate of monetary expansion while overcoming personal tax burdens.

Nominal returns are just marketing jargon; real returns are the way to survive.

Measure progress with truly important metrics: purchasing power baskets, energy, high-skilled labor hours, land area, quality calories – and not just how much each coin is worth in dollars.

This is crucial for those planning to hold long-term and cross the $200,000 threshold with BTC diamond hands: The fundamental meaning of BTC is to escape the hamster wheel imposed by fiat currency (metaphor for being busy without purpose).

If your pricing unit is depreciating at a rate of 6% to 8% over the long term, then the nominal price target is only half of the story. The other half should be: "Am I increasing my share of scarce goods and precious time?"

If the answer is negative, then the zeros behind those numbers are just a false carnival.

Of course, you can cheer for $200,000 and celebrate $1,000,000, but then please immediately ask that mature question: After the expansion of the dollar supply, what is my real annualized return? How much actual real-world units of wealth have I actually gained?

When BTC rises to 1 million dollars, it will definitely not be the 1 million you imagine today.

The number of digital digits will increase, but only by truly outperforming the currency flood will the purchasing power improve.

This is the game worth winning.

Netizen @diglloyd commented: "I completely agree. If you don't think this way, you'll fall into that classic self-deception of 'my house has tripled in value'... when in reality it took 30 years. What's trickier is considering the tax rate factor—on large gains, taxes can easily consume at least 1/3 of the 'profits'. For example, there's a 20% federal capital gains tax + a 3% surtax, and on top of that, unfortunate Californians like me have to pay the highest state tax of 13%. But at least this is better than the 28% federal tax rate on gold 'profits', which is one of the reasons investing in physical gold is so foolish. So if you successfully invest and are in places like California, in addition to currency devaluation, you also have to consider an additional 36% loss in profits. In the short/medium term, this tax factor is likely to have a greater impact than currency devaluation."

In response, @AdamBLiv expressed agreement: "Indeed. When you factor in currency devaluation and all the damn labor for house maintenance/renovation, the so-called property appreciation is simply not worth mentioning. It's just not worth it!"

Netizen @diglloyd added: "CPI is just a joke, M2 is more reliable. But allow me to suggest a market-based measurement standard? We should take the highest (most expensive) among these indicators. If the nominal yield of MSTR's STRC, STRK, STRD, STRF, and other tools is in the 8%-12% range, then I believe the most accurate depreciation rate should use the values recognized by the market for these tools—namely: an 8%-12% currency depreciation rate. If we want to be precise, we can subtract 3% as an estimate of the actual return rate (approximately 5%-9%). Personally, based on the goods and services I actually need to purchase, I have used 10% as the actual depreciation rate over the past five years... while the actual annual depreciation rate of many goods is even close to 15%."

Netizen @FabioSi57695354 commented: "The illusion is not in BTC, but in the dollar system. Nowadays, the purchasing power of 1 BTC has far exceeded that of ten years ago. Fiat currency needs inflation adjustment because its value is artificially manipulated; whereas BTC has scarcity, mathematical certainty, and immutability. The real return is not the figure "1 million USD/BTC", but the continuously growing purchasing power 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 truly understand BTC! As Jeff Booth said: 'The natural state of an open free market is deflation. When the prices of goods relative to BTC approach zero and continue to decline, your wealth is actually growing every year.'"

Netizen @retireErrant said: "Indeed. The birth of BTC was to combat currency devaluation - if you can find other equally excellent 'dark horse' assets, I might consider it. But the reality is, we have no choice."