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Month Forty-One – UP 26%
A tough month for crypto and a tough month for the 2018 Top Ten Portfolio. Although ADA saved the group from a dreaded all-red month, the 2018 Top Ten had its second worst month since the Experiment began – only March 2018 saw a larger decline in value.
More bad news: after finally breaking even in April, Litecoin has slipped back into negative territory. There are now only four cryptos (BTC, ETH, ADA, XLM) in the green.
Silver lining? The 2018 Top Ten Cryptos are still up 26% since January 2018. This is roughly where the portfolio was in March. Check out how that return compares to the S&P and the other Experiments below.
May Movement Report, Ranking, and Dropouts
Predictably, there were many more cryptos moving down than up this month:
- NEM – after falling 11 places last month, NEM fell down nine more places (#49–>#58), has now dropped out of the Top 50, and is now dangerously close to finding itself outside the Top Sixty.
- IOTA – down eight places (#29–>#37)
- Dash – down five places (#46–>#51), also out of the Top Fiddy
- Litecoin – down three places (#11–>#14)
- XRP – down three places (#4–>#7)
- Bitcoin Cash – down three places and out of the Top Ten (#10–>#13)
- ADA – up three places (#7–>#4)
Top Ten dropouts since January 2018: After forty-one months of the 2018 Top Ten Experiment, 60% of the cryptos that started in the Top Ten have dropped out. NEM, Dash, Stellar, Bitcoin Cash, IOTA, and Litecoin have been replaced by Binance Coin, Tether, DOT, UNI, Doge, and most recently, USDC. That’s two stablecoins in the Top Ten for those keeping count.
May Winners and Losers
May Winner – Winner, singular: despite a bloody month in crypto, ADA had a very strong May, finishing the month up +33%.
May Losers – Aw, NEM: for the third month in a row, NEM (-44.4%) was the worst performing of the 2018 Top Ten cryptos. IOTA didn’t do much better, down -43.9%.
Tally of Monthly Winners and Losers
After forty-one 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. With May’s loss, NEM has now finished in last place 11 of 41 months, or 27% of the time.
Bitcoin is still the only cryptocurrency that hasn’t yet lost a month since January 2018, although it has come very close a couple of times.
Overall Update – Portfolio back at March levels, 40% of cryptos in positive territory, ETH flips BTC for lead
Although it lost 30% of its total value this month, May marks the fourth straight month the 2018 Top Ten Portfolio is in positive territory. The past four months has been the only time the portfolio has been in the green. That’s thirty-seven straight months in the red, followed by the last four months of green.
40% of the 2018 Top Ten are in positive territory: BTC, ETH, ADA, and XLM. ETH (+265%) has overtaken Bitcoin (+179%) as the best performing crypto of the 2018 Top Ten Portfolio. Coming up fast behind BTC is ADA, up +163% after a strong May.
The initial $100 invested in ETH forty-one months ago is worth $366 today.
Still at the bottom is Dash, down -81% since January 2018. The initial $100 invested forty-one months ago is worth $19 today.
Total Market Cap for the entire cryptocurrency sector:
After closing last month over $2T, the total crypto market cap dipped back down to $1.64T, the same level it was at a few months ago. As a sector, crypto is up +185% 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 (+26%) and the S&P (+57%) over the same time period.
Another significant drop in BitDom this month. Not quite as dramatic as April (which saw the steepest monthly decline since the Experiment began), but one of the largest monthly declines in Bitcoin Domination in the last 3.5 years. For context, we still have a bit to go before setting a record BitDom low: the last altcoin cycle saw BTC dominance go 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 lost about $292 in May, breaking a seven month streak of upward movement that started in September 2020.
Despite the down month, the 2018 group has been in the green for four straight months. If I decided to cash out the 2018 Top Ten Experiment today, the $1000 initial investment would return $1,264, up +56% from January 2018.
Here’s a look at the ROI over the life of the experiment, month by month:
It’s been a rocky road, to say the least. The absolute bottom was in January 2019 when the 2018 Top Ten Portfolio was down -88% followed closely by the -87% Zombie Apocalypse month (March 2020) just over a year ago.
A public service announcement: it’s harder to see in the middle of a bull market, but the month of May and the numbers above should be a cautionary tale. Before jumping into crypto, take a moment to think how you would react if you were down -88% on your investment after one year and -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
That’s a wrap for the 2018 Top Ten Crypto Index Fund Experiment recap.
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 +26% (total value $1,264)
- 2019 Top Ten Experiment: up +459% (total value $5,594)
- 2020 Top Ten Experiment: up +630% (total value $7,300)
- 2021 Top Ten Experiment: up +281% (total value $3,809)
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 $17,967 ($1,264 + $5,594 + $7,300 + $3,809).
That’s up +349% on the combined portfolio. While this is a massive drop from last month, the combined portfolios are back to where they were two months ago in March. For some perspective, here’s the a look at the monthly ROI of the combined portfolios:
That’s a +349% 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?
Ethereum by far. $4,000 into Ethereum in $1k chunks once a year would now be worth $47,562. That’s up +1089%.
In distant second place, going all in on Bitcoin with $4,000 USD would have yielded +377%, turning the initial $4k investment into $19,089.
A close third place? The Top Ten Portfolio approach, up +349%. Not bad! And getting closer to an all-in on Bitcoin. This is 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 +144%, still 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. Nothing too dramatic, but the S&P continued to tick up in May, setting yet another all time high.
The S&P 500 is up +57% since January 2018, so the initial $1k investment into crypto on January 1st, 2018 would be worth $1570 had it been redirected to the S&P.
As I mentioned last month, I was hoping May would finally be the month the 2018 Top Ten outperformed the overall S&P returns over the same period of time. Alas, it was not meant to be so my champagne stays on ice.
But it’s still not a very fair fight when I combine the four portfolios: 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 yields the following:
- $1000 investment in S&P 500 on January 1st, 2018 = $1570 today
- $1000 investment in S&P 500 on January 1st, 2019 = $1680 today
- $1000 investment in S&P 500 on January 1st, 2020 = $1300 today
- $1000 investment in S&P 500 on January 1st, 2021 = $1120 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 $5,670 ($1,570 + $1,680 + $1,300 + $1,120)
That is up +42% since January 2018 compared to a +349% gain of the combined Top Ten Crypto Experiment Portfolios, a difference of 307% 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.
Despite the big crypto dip this month, crypto is still far, far ahead of the S&P over the same time period.
May was undoubtedly a tough month for crypto, but not apocalyptic: more of a shoulder shrug when you zoom out and take a look at the big picture.
My hope to be able to report this month that a 2018 homemade index fund of cryptos created as an Experiment by some guy on the internet surpassed the gains of the mighty S&P 500 was dashed. If May was a blip in the bull market, maybe I’ll be able to announce this in the coming months. If we’re at or near the top, that dream will have to hibernate for a while.
Which is it? Are we at the top or only hitting some mid bull cycle bumps? Your guess is as good as mine. So far, the Experiments show that taking a long term approach seems to be paying off, at least for now.
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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