EXPERIMENT - Tracking Top 10 Cryptocurrencies for Two Years (2018 & 2019) - Month Twenty-One - Down 83%

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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 2018. 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 2018/2019 crypto space. I’m trying to keep it simple and accessible for beginners and those looking to get into crypto but maybe not quite ready to jump in yet.

I have also started a parallel project: on January 1st, 2019, I repeated the experiment, purchasing another $1000 ($100 each) into the new Top Ten cryptos as of January 1st 2019. Spoiler alert: the 2019 Experiment makes for happier reading.

The Rules:

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

Month Twenty-One - Down 83%

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September was not quite as bad as August was for the 2018 Top Ten portfolio. While last month every crypto was down double digits, the losses in September, while significant, were slightly less pronounced. A few coins fell modestly or held their ground and IOTA actually had a solid month, posting a +10% gain.

That said, we've definitely established a pattern in the last few months. While February through June saw five straight months of sideways or upward trajectory, July, August, and now September have demonstrated an undeniable downward trend.

Ranking

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Five out of the ten cryptos shifted places in September. Bitcoin CashLitecoin, and NEM all slipped one position to #5, #6, and #25, respectively. Tenacious Stellar climbed back into the Top Ten and IOTA advanced two places, moving from #18 to #16.

40% of the cryptos that started 2018 in the Top Ten have dropped out, specifically NEM, DashIOTA, and Cardano. They have been replaced by EOSBinance Coin, Tether, and BTCSV.

September Winners - IOTA, hands down, the only green in a sea of red. IOTA gained +10% and picked up two places in the ranking. I'll give second place to Ethereum which basically held its ground.

September Losers - Both coins attached to the "Bitcoin" name. Bitcoin Cash fell the most at -24% followed closely by Bitcoin, down -21%.

For those keeping score, here is tally of which coins have the most monthly wins and loses during the first 21 months of this experiment. Most monthly wins (5): Bitcoin. Most monthly loses (5): Stellar. All cryptos have at least one monthly win. The only two coins never to lose a month? Bitcoin and Dash.

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Overall update – Bitcoin's dominance decreases, but still far ahead of the pack. Five worst performers down over -90% each, NEM at the bottom.

Although Bitcoin had a rough September, it still holds a nearly 40 percentage point lead over second place Litecoin and Ethereum. This isn't quite the widest lead Bitcoin has held since I started the experiment nearly two years ago, but it's close (last month's 50% lead is the record).

For those following the experiment it's no surprise that NEM is still the worst overall performer (down -96%) followed by CardanoDash,IOTA and Bitcoin Cash all down over -90% since January 1st, 2018. My initial $100 investment in NEM is worth just $4.41.

Total Market Cap for the entire cryptocurrency sector:

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For the third straight month, the total crypto market cap decreased, losing about $47B in September. The overall market cap is sitting around the $222B mark, a level we last saw in May 2019. Since January 2018, the total market cap is down -61%.

If you're looking for a silver lining, followers of my 2019 Top Ten Experiment will note that there has been an increase of +74% in total crypto market cap since the beginning of this year.

Bitcoin dominance:

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September finally saw a decline in Bitcoin dominance, good news for the altcoin space. The 67.6% Bitcoin dominance figure is down from last month's 70% high last month. This was easily the highest point so far since the experiment began in January 2018. For context, Bitcoin dominance was at 33% in early February 2018.

Overall return on investment from January 1st, 2018:

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After losing -$45 in August, my Top Ten 2018 portfolio was down about -$30 this month. That's three straight months of loses.

If I cashed out today, my $1000 initial investment would return about $175, down nearly -83%.

I'm doing a bit better with my 2019 Top Ten Experiment. If I cashed out today over there, that $1,000 initial investment would return $1,195, a +20% gain.

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 $1,370.

That's down about -32%.

Implications/Observations:

We finally saw Bitcoin's crypto dominance bounce back down from the sky-high 70% figure in September, perhaps signaling fresh appetite for altcoins. I'd definitely wait a few more months before declaring a trend.

Although other cryptos gained ground on Bitcoin this month, its lead remains significant and seemingly out of reach after 21 months of the experiment...until you look back a few months. The crypto space moves fast and change is constant. If I would have ended the experiment after one year, the winner at the end of 2018 would have been Stellar.

As always, the experiment's focus of solely holding the Top Ten Cryptos continues to be a losing approach. While the overall market is down -%61 from January 2018, the cryptos that began 2018 in the Top Ten are down -83% over the same period. The gap shrunk a bit this month, but is still a significant difference.

At no point in this experiment has this investment strategy been successful: the initial 2018 Top Ten have under-performed each of the twenty-one months compared to the market overall.

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 now up +11.3% since the beginning of 2018. My initial $1k investment into crypto would have yielded about +$113 had it been redirected to the S&P.

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Conclusion:

September was the third consecutive month of downward movement for crypto. While this certainly feels like a trend, the history of the Top Ten Experiment shows unpredictability is the norm. What, if anything, does Bitcoin's decline in dominance signal? Can the positive momentum from earlier in the year be recaptured? With three months left in the calendar year, anything can, and probably will happen.

Thanks for reading and for supporting 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. Keep an eye out for my parallel project where I repeated the experiment, purchasing another $1000 ($100 each) of a new set of Top Ten cryptos as of January 1st 2019.

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

These experiments track the Top Ten Cryptocurriencies at the beginning of 2018 and 2019, following their progress over the years.

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