The Truth Behind the "3% Investment Return" of Bitcoin: An In-Depth Analysis of Strategy's Five-Year Plan

Recently, a heated discussion has been sparked in the financial community regarding Peter Schiff’s analysis report, which questions MicroStrategy’s Bitcoin holdings. According to this analysis, Strategy’s investment return over the past five years, achieved through continuous investment, is surprisingly below an annualized 3%. This finding has caught many cryptocurrency supporters off guard. Given that Bitcoin’s current price has reached $70,880, with a peak of $126,080 in history, this investment return performance certainly warrants in-depth exploration.

Hidden Variables Behind Investment Return Calculations

To understand why Strategy’s investment return appears relatively modest, we need to dissect Schiff’s calculation logic. Based on publicly available data, Strategy’s average Bitcoin purchase price is approximately $75,000, and the current holdings show about a 16% unrealized gain. Spreading this 16% profit evenly over five years results in an annualized investment return of roughly 3%.

However, this method overlooks a key issue: investment returns are heavily influenced by entry timing, accumulation pace, and market cycles. Bitcoin has experienced unprecedented volatility over these five years—from lows in 2020, a bull market frenzy in 2021, to the bear market in 2022-2023, and then breaking through $90,000 at the end of 2024, reaching a new high of $126,080 in 2025. In such dramatic market fluctuations, using a single percentage to summarize investment returns cannot fully reflect the actual performance of the strategy.

How Dollar-Cost Averaging Affects Long-Term Investment Returns

Strategy employs a dollar-cost averaging (DCA) approach, meaning it consistently buys at fixed intervals and amounts regardless of price levels. The core logic of this method is to avoid timing risks and smooth out market volatility through long-term, disciplined investing.

However, because of this strategy’s nature, its return performance is also unique. When Bitcoin prices are high, regular investments buy fewer coins; when prices fall, they buy more. This accumulation method effectively lowers the average cost but also means that during bull markets, the returns may lag behind a lump-sum investment made at the low point. In other words, the discount in DCA investment returns is a trade-off for psychological comfort and disciplined investing.

Comparing Returns of Multi-Asset Portfolios: Why Traditional Assets Seem More Stable

Peter Schiff, a long-term advocate of gold, criticizes not only Bitcoin but also aims to highlight the investment return performance of other assets over the same period. From 2020 to 2025, during this unusual period, the performance differences among asset classes are evident:

• Gold: Rising from about $1,700 per ounce to current levels, with steady growth and relatively moderate volatility, providing stable returns.
• S&P 500: Demonstrated strong recovery post-pandemic, driven especially by tech stocks, with annual returns in double digits.
• Real Estate: Varies significantly by region; some markets show impressive returns, but rising interest rates pose challenges.
• Government Bonds: Although offering lower yields, risk-adjusted returns are quite respectable.

At first glance, traditional assets seem to outperform Bitcoin in terms of returns. However, this comparison ignores an important fact: the risk levels of these assets differ greatly. Bitcoin’s high volatility results in larger fluctuations in returns and entails higher downside risk. When considering risk-adjusted returns, Bitcoin’s relative performance compared to traditional assets requires more nuanced analysis.

The Critical Impact of Time Cycles on Return Evaluation

Schiff’s analysis uses a five-year period as the evaluation cycle, but this timeframe itself is debatable. Many financial planners argue that five years is too short for high-volatility assets like Bitcoin; a longer horizon of at least seven to ten years is necessary to truly assess investment performance.

A five-year period coincides with a complete Bitcoin halving cycle but is insufficient to fully demonstrate its long-term value creation. Extending the evaluation to ten years—from the lows of 2016 to 2026—would present a very different picture of Bitcoin’s returns. This also explains why long-term holders typically see much higher returns than short-term traders.

The Importance of Risk-Adjusted Returns

Financial professionals often use tools like the Sharpe Ratio to evaluate risk-adjusted returns. This metric considers not only absolute returns but also volatility. Under this framework, Bitcoin’s return-to-risk ratio may present a more balanced view.

For example, although Bitcoin’s annualized return might be around 3% or higher, when divided by its volatility, the risk-adjusted return could be significantly better than some traditional assets. Conversely, some stable assets with low absolute returns may have lower risk-adjusted performance than expected.

Future Outlook: Regulation Changes and Return Prospects

Over the past five years, the cryptocurrency regulatory environment has continuously evolved. Major economies like the US and EU have introduced targeted regulatory frameworks, directly impacting Bitcoin adoption and market confidence, thus influencing its long-term return prospects.

Between 2025 and 2026, more traditional financial institutions and corporations are expected to incorporate Bitcoin into their asset allocations. This institutional demand growth can support medium- to long-term returns. Additionally, the maturation of second-layer solutions like Lightning Network enhances Bitcoin’s utility as a transaction medium, not just a store of value.

Fundamental Technology and Long-Term Return Linkages

Many investors focus excessively on short-term price movements, neglecting the fundamental improvements of Bitcoin’s network. Indicators such as security, decentralization, and user adoption are steadily advancing beyond market price fluctuations. These fundamentals underpin long-term return potential.

In other words, today’s 3% annualized return may only reflect the performance over the past five years, not the true future potential. The strengthening fundamentals provide additional confidence for investors, often underestimated in traditional asset return analyses.

Personal Risk Tolerance and Return Expectations

While Schiff’s critique has some persuasive elements, it presupposes that all investors should aim for the same return targets. In reality, individual risk tolerance, investment horizon, and financial goals vary widely, influencing expectations and tolerance for returns.

A conservative investor nearing retirement might be satisfied with a 3% annual return, especially if it entails lower volatility; a young, aggressive investor might seek higher returns despite higher risks. Bitcoin’s role in this spectrum depends on personal circumstances rather than a single numerical benchmark.

Integrating Evaluation: Moving Beyond a Single Return Metric

A five-year annualized return of 3% is a specific data point but should not be the sole criterion for evaluating Bitcoin investment strategies. A comprehensive assessment should consider:

• The balance between absolute return and volatility
• The chosen time horizon and long-term potential
• Risk-adjusted performance
• Portfolio role and diversification benefits
• Technological fundamentals and adoption outlook
• Alignment with personal risk tolerance and financial goals

When these factors are integrated, relying solely on a single percentage oversimplifies the picture. Bitcoin’s performance should be evaluated within a broader financial context and individual investment objectives.

Conclusion: The Complex Reality Behind Investment Returns

Peter Schiff’s analysis of Strategy’s Bitcoin returns has sparked important discussions but also reveals a deeper issue: simple return figures often mask the complexity behind investment decisions.

Whether 3% or 30%, the significance of investment returns depends on context—entry timing, risk levels, time horizons, technological developments, regulatory environment, and more. Return metrics should not be viewed as absolute indicators of success or failure but as part of a more comprehensive evaluation framework.

For Bitcoin and other assets, the key is to develop strategies aligned with personal risk tolerance and long-term goals, rather than blindly chasing the highest return figures. Under this approach, 3% might represent a stable, desirable performance or an area for improvement—everything depends on your individual investment background and objectives.