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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 One – UP 51%
Welcome to the first monthly update of the brand new 2021 Top Ten Crypto Index Fund Experiment!
If you want more details on how/where I purchased these cryptos or have any general questions on the Experiment as a whole, feel free to check out my announcement post, otherwise, let’s jump in to the first update. Let’s go!
A fantastic debut month for the Class of 2021: up +51%, all in the green, looking extremely good. ADA led the way, up +121% in January.
Although undoubtedly an extremely strong first month, this isn’t quite an Experiment record. Last January, the 2020 Top Ten Portfolio finished its first month up +55%.
January Ranking and Movement Report
Quite a bit of movement, but more ups than downs for the 2021 Top Ten, always nice to see.
- LINK – up three places from #10 to #7
- ADA – up two places from #8 to #6
- DOT – up one place from #6 to #5
- 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.
The rest remained locked in place, here’s the table:
Top Ten dropouts since January 2021: None. Insert huge smiley face here and note to enjoy the moment, it’s not likely to last much longer
January Winners and Losers
January Winners – Cardano, by a ton. ADA finished the month up +121%. LINK also had a big January, gaining +92%, as well as DOT, up +87%.
January Losers – With the rest of the field in the green, the L goes to USDT. Of the non-stablecoins, Litecoin had the weakest performance of the month, up +4%, followed by Bitcoin, which gained +13%.
Tally of Monthly Winners and Losers
Not much to see here yet, but this is where we’ll be tracking the monthly Ws and Ls:
So far, just one loss for USDT and one win for Cardano.
Overall Update – 100% of cryptos in positive territory, ADA off to a strong start, Litecoin slow out of the gate, BCH in danger of dropping out of Top Ten.
Big moves for Cardano, LINK, DOT, ETH, all up over 85% in January. ADA leads the pack after the first month: thanks to a 121% increase in value in January, the $100 bucks I invested 31 days ago is now worth $220.
Besides Tether, Litecoin is the worst performing cryptocurrency of the 2021 Top Ten Portfolio so far, up only +4%. And BCH sinks to the edge of the Top Ten, now in danger of being the first 2021 Top Ten crypto to drop out of the Top Ten.
Total Market Cap for the Entire Cryptocurrency Sector:
$232B was added to the market in January, and the crypto currency market as a whole hit a milestone: its first month in history ending a month over the one trillion dollar mark. The market cap is up +30% already, just one month into the 2021 Top Ten Experiment.
Down from a January 1st high of 70.4%, this month saw BitDom contract a bit, settling back down at 62.2%. Looking at the data from the other Top Ten Crypto Index Fund Experiments this was to be expected – it’s rare that Bitcoin dominance stays up in the 70s.
For those just getting into crypto, it’s worth paying attention to the Bitcoin dominance figure, as it signals the appetite for altcoins vs. BTC.
Overall return on $1,000 investment since January 1st, 2021:
A great kick off for the 2021 Top Ten Portfolio, up +51% in its first month. The initial $1000 investment on New Year’s Day 2021 is now worth $1,509.
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.
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. Although it continued to hit all time highs, by month’s end, the S&P had barely moved, up just 0.5%
Compare that to the +51% gain of the 2021 Top Ten Crypto Portfolio over the same time period. Just one month in, the initial $1k investment in crypto is now worth $1,509.
That same $1k I put into crypto in January 2021 would be worth $1005 had it been redirected to the S&P 500 instead.
That’s a difference of over $500 on a $1k investment in just one month.
So, yes, January was a good month for crypto!
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
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.
Although not technically the best monthly debut in the history of the Top Ten Crypto Experiments, it was very, very close. And the 2021 Top Ten Portfolio’s first month gain of +51% was extremely impressive when considering the purchases were made at such high levels on January 1st, 2021. After such a strong first month, it will be interesting to see how this group of ten perform the rest of 2021.
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 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, go with the flow, think long term, don’t invest what you can’t afford to lose, and most importantly, enjoy the ride!
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