To learn about the history and the rules of the Experiments here.
This article contains affiliate links. If you click on a link in this article, I may earn a small commission at no extra cost to you.
Considering getting into cryptocurrencies? Be prepared for a wild ride.
In fact, I recommend getting your financial house in order first.
Month Twelve and Year One Report – UP 139%
Here we go! Although December was more mixed than all green November, the 2020 Top Ten Portfolio gained in value. The big stories this month were XRP’s fall from grace with the SEC and Bitcoin’s new all time high.
With this month’s update, we wrap up year one of tracking the 2020 Top Ten cryptos! In the order they started the year: Bitcoin, Ethereum, XRP, Tether, Bitcoin Cash, Litecoin, EOS, Binance Coin, BitcoinSV, and Tezos.
Just twelve months ago, this was the lay of the land – the Top Ten projects by market cap, which held nearly 90% of the total value of the entire crypto sphere. The fact that 30% of the 2020 Portfolio have already dropped out of the Top Ten goes to show just how fast crypto moves.
It’s also a good reminder of how fluid the space is and gives us all a heads up: the Top Ten today will almost certainly look different a year from now. We’re still very early in crypto, the Yahoo, Napster, AOL days (when was that, around 1999?). A lot can and will change in the coming years.
One year into the 2020 Top Ten Crypto Index Fund Experiment: 100% are in the green. The portfolio as a whole has returned nearly 140%, which lands it in second place behind the 2019 Top Ten Portfolio. Four of the ten cryptos have seen triple digit price growth led by Ethereum, up +473% since January 1st, 2020.
The 2020 Top Ten Portfolio’s +139% return outperformed six of the individual component cryptos contained within the Index while absolutely dwarfing the S&P 500’s +16% gain for the year.
Question of the Month Year:
In USD, approximately how high did Bitcoin’s price reach in 2020?
Scroll down for the answer.
December Ranking and One Year Movement Report
Lots of movement, mostly down this month. Only BTC, ETH, and LTC held their positions. After flipping Tether for third place last month, XRP was re-flipped by USDT in December. Binance Coin was the only other crypto to climb this month (up from #10 to #9). The rest lost ground: BCH and BSV fell one spot to #6 and #12 respectively, Tezos slid from #18 to #20, and EOS fell the most in December, dropping three places to #16.
Top Ten dropouts since January 2020: After one year 30% of the cryptos that started in the Top Ten have dropped out. EOS, BSV, and Tezos have been replaced by Chainlink, Cardano, and Polkadot.
Which held and which lost the most ground compared to its peers? Twelve months in, we have two climbers: Tether and Litecoin both ended the year higher than when it began. Both Bitcoin and Ethereum have been steady.
One more time, I’ll give a special year-end mention to Litecoin. Much to the shock of us nerds who have been watching for a while, LTC fell out of the Top Ten just a few months ago. Climbing back not only to the Top Ten but to the Top Five by the end of 2020 silenced quieted those who started questioning Litecoin’s relevance (for now at least).
Beginning 2020 in 10th place, Tezos has dropped the most this year – ten positions. Its final 2020 ranking of #20 places it in danger of becoming the first 2020 Top Ten crypto to fall out of the Top Twenty. EOS has also had a nine position slide, dropping from #7 in January to #16 in December.
December Winners and Losers
December Winners – Bitcoin won December. It dominated the press coverage, hit a new all time high, and gained +51% in 30 days. Litecoin quietly had an excellent month (+44%) as did Binance Coin (+22%).
December Losers – With the SEC news, XRP experienced a massive sell-off, falling -63% in December and falling out if its hard fought #3 spot in the rankings. EOS and Tezos also struggled late in 2020, finishing the year down -18% and -17%, respectively.
Year End Tally of Monthly Winners and Losers
One year into the 2020 Top Ten Experiment, here’s a snapshot of the monthly winners and losers:
With three monthly victories, ETH had the most monthly wins in 2020. BTC, Tether, and Tezos follow with two Ws each. BSV and Tether end the year tied with the most monthly losses at four each.
Year One Wrap Up – Ethereum dominates, 100% of cryptos in positive territory, EOS at the back of the pack.
Despite Bitcoin receiving the lion’s share of the buzz in 2020, Ethereum was easily the best performing Top Ten Crypto, up +473% in 2020. BTC comes in second with a +307% gain followed by Litecoin (+204%) and Binance Coin (+174%).
Besides Tether, EOS is the worst performing cryptocurrency of the 2020 Top Ten Portfolio. It has gained only +6% in a year of outsized crypto gains.
Unlike the parallel 2018 and 2019 Top Ten Portfolios, 100% of the 2020 Top Ten cryptos are in positive territory. Even XRP, which had a horrendous December, managed to end the year well in the green.
Total Market Cap for the Entire Cryptocurrency Sector:
2020 ended with a bang for crypto. For three months in a row, the month-end market cap has set new yearly highs. $193B was added to the market in December, which immediately followed the $182B added in November, The total market cap is now over the psychologically important $750B mark. That’s three quarters of a trillion dollars.
In December we achieved maximum BitDom. 70.4% BTC dominance to be exact, a record high for the 2020 Top Ten Portfolio.
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 $2,395, up +139%. After leading most of the year, the 2020 group has fallen significantly behind the 2019 Top Ten Portfolio’s +169% 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:
+139% is the highest monthly ROI so far for the 2020 Top Ten. Also of note, the 2020 Top Ten Portfolio is unique: it is the only one out of the three Experiments to have never experienced a losing month.
The range of monthly ROI for the 2020 Top Ten has been between a low of +7% in March and the new high this month of +139%.
Combining the 2018, 2019, and 2020 Top Ten Crypto Portfolios
So, how does the 2020 Top Ten Experiment compare to the parallel projects?
- 2018 Top Ten Experiment: down -49% (total value $513)
- 2019 Top Ten Experiment: up +169% (total value $2,693)
Taken together, here’s the bottom bottom bottom line for the three portfolios:
After a $3000 investment in the 2018, 2019, and 2020 Top Ten Cryptocurrencies, my combined portfolios are worth $5,601 ($513+ $2,693 +$2,395).
That’s up about +87% on the three combined portfolios, compared to +72% in November.
Lost in the numbers? Here’s a table to help visualize the progress of the combined portfolios:
That’s a +87% gain by buying $1k of the cryptos that happened to be in the Top Ten on January 1st, 2018, 2019, and 2020.
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 three years? While many have come and gone over the life of the experiment, five cryptos have started in Top Ten for all three years: BTC, ETH, XRP, BCH, and LTC. Let’s take a look:
Going all in on Bitcoin with $3,000 USD (dropped in $1k chunks every New Year’s Day since 2018) would have yielded +358%, turning that $3k into over $13,730. ETH, the best performing of the Three Year Club last month, comes in second place at the end of 2020 (+310%).
XRP, while still up in 2020, would have been the worst three year all-in bet, at -31%. Just last month this figure was +88%. That’s how fast the situation can change in crypto.
And at this point in the Experiments, while the +87% gain of the Top Ten Index Fund approach can’t compete with BTC, ETH, or LTC’s individual returns, 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. Year to date the S&P has returned +16% .
Overall, these are very solid returns, especially with such chaos in the world. This overachieves the 8% that financial planners use for predicted annual market returns and is quite positive considering 2020 was such an unpredictable year. 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 +139%. The initial $1k investment in crypto is now worth about $2,395.
That same $1k I put into crypto in January 2020 would be worth $1160 had it been redirected to the S&P 500 instead.
That’s a $1,235 difference on a $1k investment, by far the largest gaps in favor of crypto all year.
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 three 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 = $1500 today
- $1000 investment in S&P 500 on January 1st, 2020 = $1160 today
So, taken together, here’s the bottom bottom bottom line for a similar approach with the S&P:
After three $1,000 investments into an S&P 500 index fund in January 2018, 2019, and 2020, my portfolio would be worth $4,070.
That $4,070 is up +36% since January 2018, compared to a +87% gain of the combined Top Ten Crypto Experiment Portfolios over the same period of time. You can also compare against five individual coins (BTC, ETH, XRP, BCH, and LTC) by using the table above if you want.
To help provide perspective, here’s a quick look at the combined three year ROI for crypto vs. the S&P up to this point in 2020.
For those keeping track: that’s seven monthly victories for the S&P vs. five monthly victories for crypto. The largest gap is now: a 51% difference in favor of crypto.
Crypto certainly seems to have some momentum: you may notice that every crypto victory has occurred in the second half of 2020.
Final Thoughts After Year One:
As opposed to some of the more “forgotten” cryptos of the 2018 Top Ten Portfolio, most are still aware of the 2020 Top Ten projects. That said, with a 30% drop out rate after just twelve months, we’re reminded that things change fast in crypto.
The 2020 Top Ten Portfolio is a good example of just how quickly projects can capture attention… then just as quickly be discarded. That hot new project that everyone’s talking about? It may or may not be around for next year’s Top Ten.
Thanks and the Future of the Experiments
Thanks for reading and for supporting the Top Ten Crypto Index Fund Experiments over the years! I’ve continually tried to improve these reports over the years and will continue to do so. Now that I have four concurrent Top Ten Portfolios to track (plus a possible stablecoin interest spinoff) I may have to figure out a different way to share the information.
Overall, it’s been a pleasure interacting with everyone, especially beginners – feel free to reach out if you have any questions.
As for the future of the experiments? Full steam ahead.
- I’ll continue to hold and report monthly on the Top Ten Cryptos of 2018.
- I’ll continue to hold and report monthly on the Top Ten Cryptos of 2019.
- I’ll continue to hold and report monthly on the Top Ten Cryptos of 2020.
- And, just announced, yes, I repeated the experiment with the Top Ten Cryptos of 2021!
All the best in your crypto adventures in 2021!
And the Answer is…
C) $29,000According to Reuters, Bitcoin reached $29,300 on December 31st, 2020.
Follow me on Twitter here:
Help keep the lights on at the Top Ten Crypto Index Fund Experiments.