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The 2023 Top Ten Cryptocurrency Index Fund Experiment Has Begun!
For the sixth year in a row, I’m excited to announce the launch of the Top Ten Cryptocurrency Index Fund Experiment for 2023.
For those unfamiliar with the Top Ten Crypto Index Fund Experiments, my annual tradition is to buy $100 of each of the Top Ten Cryptos on New Year’s Day. I’ve been doing this annually since January 1st, 2018.
The Top Ten Experiments have now purchased a total of $6,000 in crypto since January 2018.
The 2023 Top Ten Portfolio includes the following cryptos, in descending order as per coinmarketcap.com on January 1st, 2023:
That’s a $1000 investment on the 1st of January, 2023, ($100 each) of #1 BTC, #2 ETH, #5 BNB, #6 XRP, #7 BUSD, #8 DOGE, #9 ADA, #10 MATIC, #12 DOT, and #13 LTC.
Long time Top Ten Experiment followers will notice I’m again breaking the tradition of strictly investing in the Top Ten by market cap, no matter what. Three stablecoins in the Top Ten this year is a bit much, so I included #12 DOT and #13 LTC and USDC and USDT are out. I made a similar decision with the 2022 Top Ten Portfolio.
The 2023 Top Ten Portfolio = Top Ten – USDT – USDC + #12 (DOT) + #13 (LTC).
BUSD will remain in the 2023 Top Ten Portfolio.
Why keep a stablecoin in the portfolio at all? Consistency: for better or worse, I included USDT in the 2019 Top Ten Portfolio. Including a stablecoin in the 2023 Top Ten is my attempt at an honest/fair comparison between different year’s portfolios.
Why BUSD instead of USDC or USDT? Both Tether and Circle have been included in past Experiments, it’s BUSD’s turn this year.
Why were stablecoins included in the Top Ten Experiments in the first place? Check out the FAQs.
Where Did You Purchase The 2023 Top Ten Crypto?
I get this question a lot. Where does someone actually buy all these different cryptos? Details below:
I used Uniswap on the Polygon network to purchase WBTC and MATIC:
Curve to purchase WETH, also on Polygon:
I purchased BNB, XRP, BUSD, and DOGE* on Pancakeswap on the Binance Smart Chain:
* 2023 marks the first time a dogcoin has started the year in the Top Ten – much wow!
And finally, I used Binance to purchase ADA, LTC, and DOT at the prices below:
Top Ten Experiment Features for 2023:
While attempting to stick to the original intent to keep the Experiments simple and beginner friendly, I will incorporate some slightly more advanced concepts.
- DeFi: 2022 was a horrible year for crypto CeFi, where mismanagement and corruption prevailed. To highlight DeFi options to my readers, I used more decentralized finance protocols than ever before.
- Reporting: I will continue to track the data for all Experiments, but I’ll focus on 2023 Top Ten Portfolio reports + one other Top Ten Portfolio from 2018, 2019, 2020, 2021, or 2022 on a rotating basis, producing two main posts per month.
- Crypto Market Index Token: The first Top Ten Crypto Experiment was started on 1 January 2018 in an attempt to capture the gains of the entire cryptocurrency market.
In a tradition started last year, I will see how my homemade Top Ten stacks up to emerging Crypto Index products. Last year, I compared the Experiment with Cryptex’s Total Crypto Market Cap Token (TCAP beat the 2022 Top Ten Portfolio -72% to -80%).
This year’s friendly competition will be between The Top Ten Portfolio and The Alongside Crypto Market Index Token (AMKT).
AMKT is an ERC-20 token that represents a cap weighted index of the Top 25 Cryptocurrencies (minus stablecoins) backed 1:1 by the underlying assets represented within the index. Since the Top 25 represent approximately 97% of the value within crypto, AMKT should be an excellent proxy for the entire cryptocurrency market.
Judging by past years, the Top Ten is in for an uphill battle against AMKT: one of the major lessons from my Experiments is that Total Market nearly always outperforms the homemade portfolios. Specifically, here is the ROI data (as of 1 January 2023), buying the Top Ten at equal weight vs. capturing the entire market:
- 2018 Top Ten Portfolio: -59% for the Top Ten vs. +38% for the total market cap
- 2019 Top Ten Portfolio: +126% for the Top Ten vs. +525% for the total market cap
- 2020 Top Ten Portfolio: +251% for the Top Ten vs. +319% for the total market cap
- 2021 Top Ten Portfolio: +40% for the Top Ten vs. +3% for the total market cap (an outlier – if history is any indication, I expect the Top Ten gains to fall behind the Total Market Cap over time, like the other Experiments).
- 2022 Top Ten Portfolio: -80% for the Top Ten vs. -64% for the total market cap
To kick off our friendly competition, Alongside has kindly provided 17.15 AMKT, worth $1,000 on the 1st of January, 2023 (the AMKT will be sold at the end of the year and donated to charity).
Here’s the question I’ll be tracking: as the months/years go by, would I have been better off just buying $1,000 of AMKT instead of going through the effort of creating a homemade $1,000 Top Ten Index Fund? I’m satisfied with the ROI on my $1k/year, set-it-and-forget-it approach: but is it possible to do even better with less effort?
Like every year, I’m excited to launch the latest iteration of the Top Ten Crypto Index Fund Experiment. If you’re new to the Experiments, welcome! If you’ve been following over the years, many thanks for sticking around so long.
The first monthly report for the 2023 Top Ten Portfolio will drop in early February. The year end 2018, 2019, 2020, 2021, and 2022 reports will be released in the coming weeks.
In the meantime, you’re welcome to pour through all the monthly data here.
Happy New Year and here’s hoping for a good coming year in crypto!
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