Bitcoin long-term returns may diminish as price stabilizes

Analysts suggest that Bitcoin's long-term returns may diminish as the cryptocurrency stabilizes, potentially making it more functional as a medium of exchange. According to a fair value model based on Metcalfe's Law—which posits that a network's value is proportional to the square of its users—Bitcoin's annual returns have recently appeared to be below 1%.

With an algorithmic supply cap of 21 million coins, of which over 20 million have already been issued, the price is estimated to reach approximately $120,000. This would represent an annual return of roughly 0.6% from current levels. Once the supply limit is reached, prices are not expected to increase further. While historical volatility has seen massive swings, such as the rise to $20,000 in 2017 and the crash to $3,000 in 2018, increased price stability could assist Bitcoin in its evolution toward a standard currency.