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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 Five – UP 260%
An all green month for the best performing of the four Top Ten Crypto Index Fund Experiments. Propelled by Stellar (+139%) and Ethereum (+85%) the 2019 Top Ten Portfolio increased from +169% to +260% in January alone.
January Ranking and Movement Report
Only one crypto managed to gain ground this month: Stellar moved up four places from #15 to #11.
Lots of downward movement: BCH down from #7 to #10, EOS down from #16 to #18, LTC down from #5 to #8, BSV down from #13 to #17, and Tron down from #19 to #21.
Top Ten dropouts since January 2019: After twenty-five months of the 2019 Top Ten Experiment 40% of the cryptos that started in the Top Ten have dropped out. EOS, Stellar, BSV, and Tron have been replaced by Binance Coin, Chainlink, Cardano, and Polkadot.
And Tron is the first and only 2019 Top Ten crypto that has dropped out of the Top Twenty.
January Winners and Losers
January Winners – Stellar in the driver’s seat the first month of 2021, up +139% in January. A nice bounce-back from XLM which lost a third of its value just last month.
January Losers – Always a good month for the 2019 portfolio when Tether is the worst performer. After USDT, Litecoin (+5%) and BSV’s (+8%) single digit gains weren’t nearly enough to keep pace with the rest of the pack.
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 five months of the 2019 Top Ten Experiment:
Stablecoin Tether has far and away the greatest number of monthly victories (7), which tells us that there have been seven out of twenty five months (28% of the time) where every crypto in the 2019 Top Ten Portfolio finished in the red. After USDT comes BTC with four monthly wins.
BSV, although up a strong +88% since January 2019, leads the loss column with nine losses out of the twenty five months of the 2019 Experiment (i.e. BitcoinSV has lost 36% of the time). BTC and EOS are the only two cryptos without a monthly loss compared to their Top Ten peers.
Overall Update – ETH, up nearly +900%, overtakes BTC for lead. 2019 Top Ten is up +260% and best performing of the Experiments. XRP in last place.
Ethereum, behind BTC more than 200% at the end of 2020, surged ahead this month and is now up almost +900% since January 2019. Bitcoin is a close second place (+789%) followed by Litecoin at +330%. 50% of the cryptos in the 2019 Portfolio have triple digit gains: BTC, ETH, LTC, XLM, BCH.
The initial $100 investment into first place ETH? Currently worth $1,024.
After twenty five 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 +3% gain.
At +260%, the 2019 Top Ten Portfolio is well ahead of the 2020 Top Ten Portfolio’s +223% gain and both are far, far ahead of the 2018 group , which is still in the red, down -25%. The brand new 2021 Top Ten? Up +51% after one month.
Total Market Cap for the Entire Cryptocurrency Sector:
Since January 2019, the total market cap for crypto is up nearly +700%.
Or, in the words of that one guy who’s having a duel to the death with his son, but his son doesn’t know he’s his father yet: “Impressive, most impressive”
The total crypto market cap added $232B in January and has now surpassed the psychologically important $1 trillion mark. That’s a big milestone, and a big round number – one we’ve been talking about for years in the crypto space.
The total market cap has doubled in less than three months and for the fourth straight month, it finishes the month at a record high since the 2019 Experiment began twenty-five months ago.
A bit overextended, BitDom came back to earth a bit this month after skyrocketing last month, settling around 62%. If you’re new to the space, Bitcoin Dominance is a helpful figure to keep your eye on: a falling BitDom percentage means Alts (cryptos other than Bitcoin) are on the rise.
For context, the table above shows the progression over the last twenty five 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:
A fantastic month for the 2019 Top Ten Cryptos: they gained over $900 in January. Twenty-five months later the value of the initial $1000 investment is $3,595. That makes three straight months of record returns for the 2019 Portfolio.
Exciting days, but to prove it hasn’t always been rainbows and butterflies, here’s a summary of the monthly ROI over the life of the 2019 Top Ten Index Fund experiment:
Unlike the completely red table you’ll see in the 2018 Top Ten Experiment, the 2019 crypto table is almost all green. 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.
At +260%, the 2019 Top Ten Portfolio is still the best performing out of the four Experiments. Second place is the 2020 Top Ten Cryptos, up +223%. This hasn’t always been the case: many times last year the 2020 Top Ten Portfolio performed better. But in recent months, the 2019 group has continued to widen its lead, now 37 percentage points ahead of the second place 2020 Group.
Combining the 2018, 2019, 2020, and 2021 Top Ten Crypto Portfolios
Let’s put it all together now:
- 2018 Top Ten Experiment: down -25% (total value $748)
- 2019 Top Ten Experiment: up +260% (total value $3,595)
- 2020 Top Ten Experiment: up +223% (total value $3,227)
- 2021 Top Ten Experiment: up +51% (total value $1,509)
Taking the four portfolios together, here’s the bottom bottom bottom bottom line:
After a $4000 investment in the 2018, 2019, 2020, and 2021 Top Ten Cryptocurrencies, the combined portfolios are worth $9,079 ($748+ $3,595 +$3,227+$1,509).
That’s up +127% on the combined portfolios, an Experiment record high.
Here’s a table to help visualize the progress of the combined portfolios:
In summary: That’s an +127% 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:
The Bitcoin vs. Ethereum back and forth that’s been happening since I started tracking this metric last year has taken a turn: ETH’s breakout January establishes it as easily the best choice at this point in the Experiments. As of today, $4,000 into Ethereum in $1k chunks on four consecutive New Year’s Days would be worth $24,645. That’s up +722%.
In second place, going all in on Bitcoin with $4,000 USD would have yielded +482%, turning the initial investment into $17,450.
XRP, would have been the worst four year all-in bet, at +57%. But even that is more than 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 +127% 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. 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 didn’t make any big moves in January, ending the month at similar levels to where it started.
The initial $1k investment I put into crypto two years ago would be worth $1,510 had it been redirected to the S&P 500 in January 2019.
+51% in two years is nothing to sneeze at: it’s a very, very solid return, well above what investment advisors say to expect (about 8%/year).
But still nowhere near the +260% return of the 2019 Top Ten Portfolio over the same time period.
That’s the 2019 Top Ten.
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 = $1410 today
- $1000 investment in S&P 500 on January 1st, 2019 = $1510 today
- $1000 investment in S&P 500 on January 1st, 2020 = $1170 today
- $1000 investment in S&P 500 on January 1st, 2021 = $1005 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 $5,095.
That is up +27% since January 2018 compared to a +127% gain of the combined Top Ten Crypto Experiment Portfolios, a difference of 100 percentage points 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 100% difference is the gap largest since I’ve been tracking this metric last year, even with stocks at all time highs.
A fantastic start of the year for the 2019 Top Ten Portfolio: a record jump in monthly value and further solidification of its front runner status compared to the other Experiments. How long can this group continue to outpace the pack? Stay tuned.
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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