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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 Thirteen – UP 223%
A solid, all green month for the 2020 Top Ten Portfolio (which includes Bitcoin, Ethereum, XRP, Tether, Bitcoin Cash, Litecoin, EOS, Binance Coin, BitcoinSV, and Tezos). ETH had a breakout month and is now crushing the competition, up +962% in the thirteen months since January 1st, 2020. Second place BTC? Up +366%.
100% of this group is in the green overall. The portfolio has gained nearly 223% since its inception. This lands it in second place behind the 2019 Top Ten Portfolio. Five of the ten cryptos have seen at least triple digit price growth.
The 2020 Top Ten Portfolio’s +223% return outperformed seven of the individual component cryptos contained within the Index while absolutely dwarfing the S&P 500’s +17% gain over the same period of time.
January Ranking and Movement Report
All downward movement for the 2020 Top Ten in January:
- BSV – down four places from #13 to #17
- LTC – down three places from #5 to #8
- BCH – down three places from #7 to #10, now teetering on the edge of the Top Ten
- EOS – down two places from #16 to #18
- Tezos – down two places from #20 to #22
The rest remained locked in place, here’s the table:
Top Ten dropouts since January 2020: 30% of the cryptos that started in the Top Ten have dropped out, and . EOS, BSV, and Tezos have been replaced by Chainlink, Cardano, and Polkadot.
The 2020 Top Ten dropout rate of 30% is slightly better than the 40% dropout rate of both the 2018 and 2019 Top Ten Portfolios. One month in, the 2021 Top Ten Portfolio cryptos have zero drop outs, but this is crypto: don’t expect this to hold for very long.
This month, Tezos became the first 2020 Top Ten crypto to fall out of the Top Twenty. Its current #22 rank places it below the worst performer of the 2019 Portfolio (Tron, at #21).
January Winners and Losers
January Winners – January belonged to Ethereum, up +85% on the month. XRP made up a bit of its large, SEC-related December losses (-63%), finishing in second place, up +51%.
January Losers – With the rest of the field solidly in the green, the L goes to USDT. Of the non-stablecoins, Litecoin had the weakest performance of the month, up +5%.
Tally of Monthly Winners and Losers
After thirteen months, here’s a snapshot of the 2020 Top Ten Experiment’s monthly winners and losers:
With four monthly victories, ETH now has double the wins of the tied for second place BTC, Tether, and Tezos. With a loss this month, Tether now stands alone with the most monthly losses at five.
Overall Update – Ethereum opens up a considerable lead, 100% of cryptos in positive territory, worst performer (EOS) still up +20%.
Ethereum made a massive move in January, now up +962% in just thirteen months. BTC comes in at an increasingly distant second place with a +366% gain followed by Binance Coin (+262%).
Besides Tether, EOS is the worst performing cryptocurrency of the 2020 Top Ten Portfolio. Its 20% gains, while comparable to the stock market (see below), have in no way kept up with those of its 2020 Top Ten peers.
Total Market Cap for the Entire Cryptocurrency Sector:
For four months in a row, the month-end market cap has set new highs for the 2020 Top Ten. $232B was added to the market in January, and the crypto currency market as a whole is now worth over a trillion dollars. Taken as a whole, the market cap is up +431% in the thirteen months of the 2020 Top Ten Experiment.
Down from a record 2020 Top Ten high of 70.4% in December, January saw BitDom contract a bit, settling back down at 62.2%. Last month was a bit of an aberration: the average percentage is in the mid 60s.
For context, the BitDom range since the beginning of the experiment in January 2020 has been roughly between 57% and 70%.
If you’re new to the space, keep an eye on this number: a high BitDom signals less of an appetite for altcoins and vice versa.
Overall return on $1,000 investment since January 1st, 2020:
After an initial $1000 investment on January 1st, the 2020 Top Ten Portfolio is now worth $3,228, up +223%. After leading most of last year, the 2020 Top Ten have fallen significantly behind the 2019 Top Ten Portfolio’s +260% which is now the best performing of the three Experiments. More on that below.
Here’s the month by month ROI of the 2020 Top Ten Experiment, hopefully helpful to maintain perspective and provide an overview as we go along:
+223% is the highest monthly ROI so far for the 2020 Top Ten. It has also never seen a red month yet.
The range of monthly ROI for the 2020 Top Ten has been between a low of +7% in March 2020 and the new high this month of +223%.
Combining the 2018, 2019, 2020, and 2021 Top Ten Crypto Portfolios
So, where do we stand if we combine four years of the Top Ten Crypto Index Fund Experiments?
- 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, up from +87% last month.
Lost in the numbers? Here’s a table to help visualize the progress of the combined portfolios:
That’s a +127% gain by buying $1k of the cryptos that happened to be in the Top Ten on January 1st, 2018, 2019, 2020, and 2021.
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 have come and gone over the life of the experiment, five cryptos have started in Top Ten for all four years: BTC, ETH, XRP, BCH, and LTC. Let’s take a look:
Although there’s been some back and forth between Ethereum and Bitcoin here, 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.
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.
So that’s the Top Ten Crypto Index Fund Experiments snapshot. Let’s take a look at how traditional markets are doing.
Comparison to S&P 500
I’m also tracking the S&P 500 as part of my experiment to have a comparison point to traditional markets. Another month, another all time high for the S&P. The S&P has returned +17% since January 1st, 2020.
Overall these are very solid returns and probably more than would be expected during a pandemic year. This more than doubles the 8% that financial planners use for predicted annual market returns.
Now scroll up for how it compares to crypto, or let me just make it easy for you: over the same time period, the 2020 Top Ten Crypto Portfolio is returning about +223%. The initial $1k investment in crypto is now worth about $3,228.
That same $1k I put into crypto in January 2020 would be worth $1170 had it been redirected to the S&P 500 instead.
That’s a $2,058 difference on a $1k investment, by far the largest gap in favor of crypto since the 2020 Top Ten Experiment began.
But that’s just 2020. What about in the longer term? What if I invested in the S&P 500 the same way I did during the first four years of the Top Ten Crypto Index Fund Experiments? What I like to call the world’s slowest dollar cost averaging method? Here are the figures:
- $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
So, 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. Spoiler: even the lowest performing crypto (XRP) is still returning double the S&P over the same time period.
To help provide perspective, here’s a quick look at the combined four year ROI for crypto vs. the S&P up to this point.
With four straight monthly wins, crypto certainly seems to have some momentum.
Another big month for crypto. It’s starting to feel a bit like 2017, when everything was just going up, every project a sure shot, no end in sight. With such large institutional buy in, this time it feels a bit different, but how long crypto can keep up this pace without a significant pullback remains to be seen.
To both new and long time Experiment followers: thanks so much for reading and for supporting the Top Ten Crypto Index Funds, 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, 2019, 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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