EXPERIMENT - Tracking Top 10 Cryptocurrencies of 2019 - Month Eleven - UP 10%

EXPERIMENT - Tracking Top 10 Cryptocurrencies of 2019 - Month Eleven - UP 10%


2019 Top Ten Crypto Index Fund Experiment November 2019 Recap

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The Experiment:

Instead of hypothetically tracking cryptos, I made an actual $1000 investment, $100 in each of the Top 10 cryptocurrencies by market cap as of the 1st of January 2018I then repeated the experiment on the 1st of January 2019. Think of it as a lazy man's Index Fund (no weighting or rebalancing), less technical, more fun (for me at least), and hopefully still a proxy for the market as a whole - or at the very least an interesting snapshot of the 2019 crypto space. I am trying to keep this project simple and accessible for beginners and those looking to get into crypto but maybe not quite ready to jump in yet. I try not to take sides or analyze, but rather report and document in a detached manner letting the numbers speak for themselves.

The Rules:

Buy $100 of each the Top 10 cryptocurrencies on January 1st, 2019. Hold only. No selling. No trading. Report monthly. Compare loosely to the 2018 Top Ten Experiment.

Month Ten - Up 10%

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap

November was the complete opposite of October:  100% of the Top Ten cryptos were in the green last month, 100% are in the red this month (except Tether of course, which is always flat). When Tether is the best performer, it signals a rough month for the 2019 Top Ten portfolio.

Overall, the 2019 Top Ten portfolio is up +10% on the year.  For context, this same group of cryptos was up +114% at the peak in May 2019.  Additionally, the portfolio has fallen well behind the stock market as measured by the S&P 500 (see below).

Ranking and November Winners and Losers

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - Rank

Not much movement this month. Bitcoin Cash slipped back into the #5 slot. EOS and Tether both advanced a position (to#7 and #4, respectively) and that's it. 

Big picture, in the constantly shifting crypto landscape, it's a bit of surprise that nearly all of the coins that started in the Top Ten on January 1st, 2019 are still there (except Tron, which stands alone as a Top Ten dropout, replaced by Binance Coin). This is certainly different from the 2018 Top Ten Experiment where coins have fallen and fallen hard.

November Winners - Winner, singular:  Tether.  A distant second is Stellar, down -17% in November. 

November Losers - Bitcoin Cash followed by Ripple, down -27% and -25% respectively.  

For those keeping score, here is tally of which coins have the most monthly wins and loses during the first eleven months of this experiment: Tether has pulled ahead of Bitcoin and BTCSV. Bitcoin SV has the most monthly losses, finishing last in four out of the first eleven months of 2019.

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - Wins and Losses

Overall update – Bitcoin maintains sizable lead over second place Litecoin. All cryptos in positive territory except Stellar, Ripple, and Tron.

BTC and Litecoin are still far ahead of their peers, up +93% and +49% respectively in 2019. My initial $100 investment in Bitcoin is now worth $197.

All Top Ten cryptos are still either flat or in positive territory except Stellar, Ripple and Tron. Stellar continues to be a drag on the overall return of the 2019 Top Ten portfolio, down -50% in 2019. Ripple and Tron follow down about -40% and about -20% respectively.

Total Market Cap for the entire cryptocurrency sector:

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - Total Market Cap

The crypto market gave up its October gains and then some as $50B was shed in November. The overall market cap now back to the $198B mark, last seen in May 2019. 

A bit of perspective: it still has been a very strong year for crypto overall.  The entire market cap is up +56% since the beginning of 2019.

Bitcoin dominance:

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - Bitdom

Bitcoin dominance decreased slightly in November.  The range this year has gone from a high of 70% in September 2019 to a low of 50% in March 2019.

Overall return on investment from January 1st, 2019:

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - Return

If I cashed out the 2019 Top Ten portfolio today, my $1,000 initial investment would return $1,100, a +10% gain.

I'm down significantly in my 2018 Top Ten Experiment. If I cashed that group out today, the $1000 initial investment would return about $150, down nearly -85%.

Taken together, here's the bottom bottom line: after a $2000 investment in both the 2018 and the 2019 Top Ten Cryptocurrencies, my portfolios would be worth $1,250.

That's down -37.5%.

Implications/Observations:

With the crypto market as a whole up +56% on the year, how have the 2019 Top Ten cryptos performed? Up a much lower +10%. As a reminder, in May 2019, the gains from the 2019 Top Ten and the entire market cap were both exactly the same: +114%. The last few months have seen that gap widen: for six straight months, focusing only on the Top Ten has been a losing strategy. This of course implies that I would have done a bit better if I'd picked a different group of cryptos.

This is reminiscent of last year as at no point in the Top Ten 2018 Experiment did the Top Ten strategy outperform the overall market.

I'm also tracking the S&P 500 as part of my experiment to have a comparison point with other popular investments options. The S&P 500 is up +24% since the beginning of 2019.  This is now more than double the +10% my 2019 Top Ten portfolio is returning.  Quite a turnaround from May of this year, when the Top Ten portfolio was up +114% compared to +10% for the S&P.

So, the initial $1k investment I put into crypto would now be worth $1240 had it been redirected to the S&P 500.

2019 Top Ten Crypto Index Fund Experiment November 2019 Recap - S and P 500

Conclusion:

After a reprieve in October, crypto has resumed the slide it started in the summer.  Until recently, it looked like the 2019 Top Ten would easily outperform the market on the year, but that outcome is definitely in doubt now.  More telling, with only one month left in 2019, I'm no longer confident that the portfolio will at least break even: as of the end of November, the 2019 Top Ten portfolio only holds a slim +10% return, gains that can easily evaporate before the new year.

If you're just finding this experiment now, here's the backstory: On the 1st of January, 2018, I bought $100 each of the Top Ten cryptos at the time for a total investment of $1000 to see how they would perform over the year. I tracked the experiment and reported each month. The result? I ended 2018 down -85%, my $1000 worth only $150.

After last year's experiment ended, I decided to do two things:

  1. Extend the Top Ten 2018 Crypto project one more year. The experiment is now in its 23nd month. You can check out the latest update here.
  2. What you're reading now is the 11th report of a parallel project: this year I repeated the experiment, purchasing another $1000 ($100 each) of the new Top Ten cryptos as of January 1st, 2019.

Thanks for reading and the support for the experiment. I hope you’ve found it 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.

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Top Ten Cryptocurrency "Index Fund" Experiments
Top Ten Cryptocurrency "Index Fund" Experiments

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