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Considering getting into cryptocurrencies? Be prepared for a wild ride.
In fact, I recommend getting your financial house in order first.
Month Forty – UP 56%
Although BTC slipped in April, it was a solid month overall for the 2018 Top Ten Portfolio. Led by XRP, the 2018 Index Fund Experiment ended its 40th month +56%. This is only the third green month since the Experiment began.
As predicted last month, for the first time Litecoin joined the group of green cryptos, finally breaking even in April and ending the month +24%. XRP looks like it’s up next.
April Ranking, Movement Report, and Dropouts
Despite a good month for the portfolio, there were more downs than ups:
- NEM – after falling 22 places last month, NEM fell down eleven more places (#38→#49) and is now dangerously close to finding itself outside the Top Fifty. NEM, how low can you go?
- IOTA – down one place (#28→#29)
- ADA – down two places (#5→#7)
- Litecoin – down two places (#9→11)
- Bitcoin Cash – up four places (#14→#10) and back in the Top Ten
- XRP – up three places (#7→#4)
Top Ten dropouts since January 2018: After forty months of the 2018 Top Ten Experiment, 50% of the cryptos that started in the Top Ten have dropped out. NEM, Dash, Stellar, IOTA, and Litecoin have been replaced by Binance Coin, Tether, DOT, UNI, and Doge.
Wait, what now?
Doge? For reals?
Yep. For the first time since the 2018 Top Ten Experiment began, Dogecoin is in the Top Ten.
Much, much wow.
April Winners and Losers
April Winners – XRP easily outpaced its peers, up +172% in April. Bitcoin Cash finished in second place this month, up +72%.
April Losers – For the second month in a row, NEM (-9%) was the worst performing of the 2018 Top Ten cryptos. BTC was second worst performing, down -5% in April.
Tally of Monthly Winners and Losers
After forty months, here’s a tally of the monthly winners and losers over the life of the 2018 Top Ten Experiment.
With 10, Bitcoin has the most monthly wins. BTC’s polar opposite, NEM, has lost 10 months, the most out of the 2018 Top Ten Cryptos.
And Bitcoin is unique as the only cryptocurrency that hasn’t yet lost a month since January 2018, although it came very close this month.
Overall Update – 50% of cryptos in positive territory, LTC breaks even, BTC in lead, but ETH is gaining fast
For the third straight month the 2018 Top Ten Portfolio is in positive territory. The past three months have been the only three months the portfolio has been in the green. That’s thirty-seven straight months in the red, followed by the last three months of green.
Half the 2018 Top Ten have are in positive territory: BTC, ETH, ADA, XLM, and just this month, Litecoin. Bitcoin (+333%) is still the best performing crypto of the 2018 Top Ten Portfolio, but ETH (+305%) is coming up fast.
The initial $100 invested in BTC forty months ago is worth $433 today.
And at the bottom, the initial $100 invested forty months ago in the worst performing crypto, Dash, is worth $30 today. Dash is down -69% since January 2018.
Total Market Cap for the entire cryptocurrency sector:
For the first time, the total crypto market cap closed a month over $2T. Quite the milestone, especially considering the total market cap was around $250B just a year ago. As a sector, crypto is up +285% since January 2018. If you were able to capture the entire crypto market since New Year’s Day 2018, you’d be doing much better than both the Experiment’s Top Ten approach (+55.6%) and the S&P (+56.4%) over the same time period.
After years of relative boredom, the BitDom figure started to get interesting in April: it declined 10% from last month, the steepest decline so far since the Experiment began forty months ago. We still have a bit to go before setting a record low: the last altcoin cycle saw BTC dominance go all the way down to a low of 33% back in the first month of the 2018 Experiment.
Overall return on $1,000 investment since January 1st, 2018:
The 2018 Top Ten Portfolio gained about $255 in April and is now maintaining a three month green streak. If I decided to cash out the 2018 Top Ten Experiment today, the $1000 initial investment would return $1,556, up almost +56% from January 2018.
For a taste of how rocky the journey has been, take a look at the ROI over the life of the experiment, month by month:
It’s been a rough road: forty months into the Experiment and only three months in positive territory. That said, the trend since September 2020 has been straight up: April was the seventh straight month of upward portfolio movement..
How bad did it get along the way? Pretty bad: the bottom in January 2019 when the 2018 Top Ten Portfolio was down -88% followed closely by the -87% Zombie Apocalypse month (March 2020) about a year ago.
If you’re just joining us in the crypto space, these numbers should be a cautionary tale. Before selling your home to buy crypto, take a moment to think about being down -88% on your investment after one year, -87% after two years. That age old advice of not investing what you can’t afford to lose? Probably pretty good advice.
Combining the 2018, 2019, 2020, and 2021 Top Ten Crypto Portfolios
2018 Top Ten Crypto Portfolio update complete.
But I didn’t stop in 2018: I invested another $1000 in the 2019, 2020, and 2021 Top Ten Cryptos as well. How are the other Crypto Index Fund Experiments doing?
- 2018 Top Ten Experiment: up +56% (total value $1,556)
- 2019 Top Ten Experiment: up +653% (total value $7,527)
- 2020 Top Ten Experiment: up +952% (total value $10,522)
- 2021 Top Ten Experiment: up +393% (total value $4,927)
So overall? Taking the four portfolios together, here’s the bottom bottom bottom bottom line:
After a $4,000 investment in the 2018, 2019, 2020, and 2021 Top Ten Cryptocurrencies, the combined portfolios are worth $24,532 ($1,556 + $7,527 + $10,522 + $4,927).
That’s up +513% on the combined portfolios, another Experiment record. Here’s the monthly combined summary to help visualize the progress:
That’s an +513% gain by investing $1k on whichever cryptos happened to be in the Top Ten on January 1st for four straight years.
Top Ten Approach vs. All-In Approach
An index fund is designed to mitigate risks, so going all-in on one coin would have produced better returns, right?
Short answer: yes. If you guess correctly. Let’s take a look.
Only five cryptos have begun each of the last four years in the Top Ten: BTC, ETH, XRP, BCH, and LTC.
Assuming the same $1k on January 1st four years in a row strategy of the Experiment, which crypto would prevail?
It’s Ethereum by a ton. $4,000 into Ethereum in $1k chunks once a year would now be worth $52,705. That’s up +1218%.
In distant second place, going all in on Bitcoin with $4,000 USD would have yielded +638%, turning the initial investment into $29,530.
Third place? The Top Ten Portfolio approach, up +513%. Not bad! And about what you’d expect for an Index strategy, falling somewhere between the best and worst performers.
At the bottom? Even though BCH would have been your worst four year all-in bet, this super-slow dollar cost averaging approach would still be returning +249%, much better than the S&P (see below).
Comparison to S&P 500:
I’m also tracking the S&P 500 as part of the Experiment to have a comparison point with other popular investments options. Another month, another all time high for the S&P 500 Index.
The S&P 500 is up +56.4% since January 2018, so the initial $1k investment into crypto on January 1st, 2018 would be worth $1564 had it been redirected to the S&P.
That’s just barely ahead of the Top Ten Crypto Index Fund’s return of 55.6% over the same time period. My champagne will have to stay on ice.
Taking the same invest-$1,000-on-January-1st-of-each-year approach with the S&P 500 that I’ve been documenting through the Top Ten Crypto Experiments? Here are the numbers:
- $1000 investment in S&P 500 on January 1st, 2018 = $1564 today
- $1000 investment in S&P 500 on January 1st, 2019 = $1670 today
- $1000 investment in S&P 500 on January 1st, 2020 = $1290 today
- $1000 investment in S&P 500 on January 1st, 2021 = $1110 today
Taken together, here’s the bottom bottom bottom bottom line for a similar approach with the S&P:
After four $1,000 investments into an S&P 500 index fund in January 2018, 2019, 2020, and 2021, my portfolio would be worth $5,634 ($1,564 + $1,670 + $1,290 + $1,110)
That is up +41% since January 2018 compared to a +513% gain of the combined Top Ten Crypto Experiment Portfolios, a difference of 472% in favor of crypto.
You can compare against five individual coins (BTC, ETH, XRP, BCH, and LTC) by using the table above if you want. The key takeaway? Using a similar investing strategy, the S&P 500 is currently severely underperforming XRP, Bitcoin Cash, BTC, ETH, LTC and the Top Ten Crypto Portfolio approach.
Here’s a table summarizing the four year ROI comparison between a Top Ten Crypto approach and the S&P as per the rules of the Top Ten Experiments.
This doesn’t even look close to a fair fight at the moment. Anyone else getting nervous or is it just me?
Up 25% from last month, it was solid, but not blockbuster April for the 2018 Top Ten Crypto Portfolio. Litecoin finally getting back in green territory was a highlight as was the fact that 50% of the cryptocurrencies are now in positive territory.
I was hoping to report this month that this homemade index fund of cryptos created as an Experiment by some guy on the internet had surpassed the gains of the mighty S&P 500, but by the slimmest of margins (55.6% vs. 56.4%) the S&P is still in the lead. Hopefully next month.
To the long-time Experiment followers: thanks so much for reading and for supporting the project over the years.
For those just getting into crypto, welcome! I hope these reports can somehow help you see what you may be in for as you begin your crypto adventures. Buckle up, think long term, don’t invest what you can’t afford to lose, and enjoy the ride!
Feel free to reach out with any questions and stay tuned for monthly progress reports. Keep an eye out for my parallel projects where I repeat the experiment, purchasing another $1000 ($100 each) of new sets of Top Ten cryptos as of January 1st, 2019, January 1st, 2020, and most recently, January 1st, 2021.
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