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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 Twenty Six – UP 354%
Although it is no longer the best performing of the four Top Ten Crypto Index Fund Experiments, the 2019 Top Ten had a very strong February and its second straight all green month. BTC and Tron led the way and the portfolio as a whole increased from +260% to +354% in just one month.
February Ranking, Movement Report, and Dropouts
For the second straight month, the only crypto that managed to gain ground was Stellar, up one position from #10 to #11.
The rest of the field lost ground in the rankings:
- Bitcoin Cash – down one place (#10→#11, and out of the Top Ten)
- Tether – down two places (#3→#5)
- XRP – down three places (#4→#7)
- Tron – down three places (#21→#24)
- EOS – down four places (#18→#22)
- BSV – down six places (#17→#23)
Top Ten dropouts since January 2019: After twenty-six months of the 2019 Top Ten Experiment 40% of the cryptos that started in the Top Ten have dropped out. EOS, Bitcoin Cash, BSV, and Tron have been replaced by Binance Coin, Chainlink, Cardano, and Polkadot.
And this month BSV and EOS joined Tron as the only 2019 Top Ten cryptos that have dropped out of the Top Twenty.
February Winners and Losers
February Winners – BTC (+46%) and Tron (+44%) were the 2019 Top Ten Portfolio’s best performers this month followed by another strong showing by XLM (+32%).
February Losers – Always a good sign for the 2019 portfolio when Tether is the worst performer. After USDT came BSV with only a +3% gain this month.
Tally of Monthly Winners and Losers
Which crypto holds the most wins or losses over the life of the project? Here’s a snapshot of the winners and losers over the first twenty-six months of the 2019 Top Ten Experiment:
Tether has the greatest number of monthly victories (7) followed by BTC with five. This tells us 27% of the time (i.e. seven times out of twenty six months) every crypto in the 2019 Top Ten Portfolio has finished the month in the red.
BSV, although up +93% since January 2019, leads the loss column with nine losses out of the twenty six months of the 2019 Experiment (i.e. BitcoinSV has lost 35% of the time). BTC and EOS are the only two cryptos without a monthly loss compared to their 2019 Top Ten peers.
Overall Update – BTC takes lead from ETH. BTC and ETH both up over 1000%. 2019 Top Ten is up +354%. All cryptos in green, XRP in last place.
Thanks to its first place showing in February, BTC (+1195%) has overtaken ETH (+1025%) for the lead in the 2019 Top Ten Experiment. The performance of both cryptos this month has helped the 2019 Top Ten Portfolio reach another milestone: the first two cryptos to be up more than +1000% since January 2019.
The initial $100 investment into first place Bitcoin? Currently worth $1,320.
After twenty six months 100% of the cryptos in the 2019 Top Ten Portfolio are either flat or in positive territory. Not counting Tether, the worst performing crypto is XRP’s +23% gain.
Although the 2019 Top Ten Portfolio is up an impressive +354%, it has lost Best Performing Top Ten Index Fund Experiment bragging rights to the 2020 Top Ten Portfolio’s +426% gain.
Total Market Cap for the Entire Cryptocurrency Sector:
Since January 2019, the total market cap for crypto is up nearly +773%.
The total crypto market cap gained nearly half a trillion (with a T) US dollars in February, just one month after finally reaching the $1T milestone.
For the fifth straight month, the total market cap finishes the month at a record high since the 2019 Experiment began twenty-six months ago.
BitDom slipped one percentage point to 61% in February, a non-event in crypto. If you’re new to the space, Bitcoin Dominance is a helpful figure to keep your eye on: a falling BitDom percentage means Alt Coins (cryptos other than Bitcoin) are on the rise.
For context, the table above shows the progression over the last twenty six months with BTC domination ranging between 50%-70% since the beginning of the 2019 Experiment.
Overall return on $1,000 investment since January 1st, 2019:
Another great month for the 2019 Top Ten Cryptos: they gained almost $1000 in February. Twenty-six months later the value of the initial $1000 investment is $4,543. That makes four straight months of record returns for the 2019 Portfolio.
Here’s a table summarizing the monthly ROI over the life of the 2019 Top Ten Index Fund experiment:
The 2019 table is the exact opposite of the 2018 Top Ten Experiment, which is completely red except for one green month. The first month was the lowest point (-9%) with some single digit bumps along the way. The high point is now. The previous high point? Last month. The one before that? Two months ago. You get the picture: it’s been a great run for the 2019 Top Ten in recent months.
At +354%, the 2019 Top Ten Portfolio has dropped to second best performing out of the four Experiments. First place is the 2020 group of Top Ten Cryptos, up 426%. Over the years, it’s been a back and forth battle between the 2019 and 2020 Top Ten Portfolios for supremacy, but this month’s breakout performance has given the 2020 group a commanding 72 percentage point lead over the second place 2019 Portfolio.
Combining the 2018, 2019, 2020, and 2021 Top Ten Crypto Portfolios
Speaking of other Top Ten Portfolios, let’s put them all together now:
- 2018 Top Ten Experiment: up +15% (total value $1,150)
- 2019 Top Ten Experiment: up +354% (total value $4,543)
- 2020 Top Ten Experiment: up +426% (total value $5,264)
- 2021 Top Ten Experiment: up +194% (total value $2,936)
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 $13,893 ($1,150 + $4,543 + $5,264 + $2,936).
That’s up +247% on the combined portfolios, a record high for the Top Ten Index Fund Experiment project.
Here’s a table to help visualize the progress of the combined portfolios:
In summary: That’s an +247% gain by investing $1k on whichever cryptos happened to be in the Top Ten on January 1st for four straight years.
Top Ten Index Approach vs. All-In Approach
But what if I’d gone all in on only one Top Ten crypto for the past four years? While many projects have come and gone over the life of the experiment, only five cryptos have remained in the Top Ten for all three years: BTC, ETH, XRP, BCH, and LTC. So let’s take a look at those five:
Since I started tracking this metric, there’s been a bit of a back and forth between Bitcoin and Ethereum. This month, for the second time in a row, ETH would have given the best return on investment: $4,000 into Ethereum in $1k chunks once a year would now be worth an impressive $27,794. That’s up +826% and a pretty good argument for dollar cost averaging.
In second place, going all in on Bitcoin with $4,000 USD would have yielded +747%, turning the initial investment into $25,400.
XRP, would have been the worst four year all-in bet, with a return of +88%. But even that is nearly double the return from traditional markets (more on that below).
And the Top Ten Index Fund approach?
As you might expect, as indexes are designed to mitigate risk, the +247% gains of the Top Ten Index Fund approach fall somewhere in between. The Top Ten strategy isn’t keeping up with ETH, BTC, or LTC, but it is outperforming a hypothetical all-in investment in both XRP and BCH by a healthy margin.
Alright, that’s crypto madness this month. How does crypto markets compare to the stock market?
Comparison to S&P 500:
I’m also tracking the S&P 500 as part of the experiments to have a comparison point with traditional markets. The S&P 500 sputtered in January, but gained about 5% in February, reaching yet another all time high.
The initial $1k investment I put into crypto two years ago would be worth $1,560 had it been redirected to the S&P 500 in January 2019.
For traditional markets, +56% in two years is spectacular and well above what investment advisors use as a planning figure (about 8%/year).
Yet about three hundred percentage points behind the return of the 2019 Top Ten Portfolio over the same time period.
But what if I took the same world’s-slowest-dollar-cost-averaging $1,000-per-year-on-January-1st crypto approach with the S&P 500? It would yield the following:
- $1000 investment in S&P 500 on January 1st, 2018 = $1460 today
- $1000 investment in S&P 500 on January 1st, 2019 = $1560 today
- $1000 investment in S&P 500 on January 1st, 2020 = $1210 today
- $1000 investment in S&P 500 on January 1st, 2021 = $1040 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 $5,270.
That is up +32% since January 2018 compared to a +247% gain of the combined Top Ten Crypto Experiment Portfolios, a difference of 215% in favor of crypto.
You can also compare against five individual coins (BTC, ETH, XRP, BCH, and LTC) by using the table above if you want, but I’ll save you the scroll: even the lowest performing crypto (XRP) is still returning double the S&P over the same time period.
Here’s a table providing an overview of the four year ROI comparison between a Top Ten Crypto approach and the S&P:
The 215% difference is by far the largest gap since I began tracking this metric last year, even with stocks at all time highs.
Another fantastic month for the 2019 Top Ten Portfolio and for the Combined Experiments, especially when compared to traditional markets. Although it did lose its front runner status compared to the other Top Ten Experiments, it will be interesting to see if the 2019 Top Ten Cryptos can mount a comeback and regain the lead in the coming months.
To both new and long time Experiment followers: thanks so much for reading and for supporting the Top Ten Indexes, I hope you’ve found them helpful. I continue to be committed to seeing this process through and reporting along the way.
Feel free to reach out with any questions and stay tuned for progress reports. Keep an eye out for my parallel projects tracking the Top Ten cryptos as of January 1st, 2018 (the OG experiment), January 1st, 2020, and most recently, January 1st, 2021.
For those just getting into crypto, I hope these reports can somehow help you see the highs and lows of what might await you on your crypto adventures. Buckle up, think long term, don’t invest what you can’t afford to lose, and most importantly, enjoy the ride!
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