I bought $1000 worth of the Top Ten Cryptos on January 1st, 2018 (Oct. 2019 Update)

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 much 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-Two – Down 81%

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Thanks to some positive news out of China, October decisively broke a three month losing streak for the 2018 Top Ten portfolio. All cryptos in the experiment were either up or flat this month, a welcome change from summer’s downward trend.

Ranking and October Winners and Losers

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Although the market as a whole gained, a few of our 2018 Top Ten coins had trouble keeping up. IOTA and NEM each dropped two places to #18 and #27, respectively. Dash slid three slots, and now teeters on the edge of the Top Twenty. On the positive side Bitcoin Cash gained one position in the rankings, climbing to the four spot.

October Winners – Bitcoin Cash rebounded nicely after a dismal September finishing +29% up on the month. Ripple and Stellar had solid months as well, ending October at +16% and +14% respectively.

October Losers – Only IOTA lost value this month, down -1%. Along with NEM and Dash, the three were basically flat in October.

For those keeping score, here is tally of which coins have the most monthly wins and loses during the first 22 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 far ahead of peers. Four worst performers down over -90% each, NEM still in basement.

Bitcoin is still miles ahead of the pack maintaining a 40+ percentage point lead over second place Litecoin and third place Ethereum. This isn’t even the widest lead Bitcoin has held since I started the experiment nearly two years ago: August 2019’s +50% lead is still the record.

Looking through my past reports, poor NEM has been stuck in the basement all year. Since January 2019 is has been the experiment’s worst overall performer. NEM is currently down -96% followed by CardanoDash, and IOTA all down over -90% since January 1st, 2018. My initial $100 investment in NEM is worth just $4.49.

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 They have been replaced by EOS, Binance Coin, Tether, and BTCSV.

Total Market Cap for the entire cryptocurrency sector:

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Breaking a three month losing streak, crypto ended October in positive territory, up about +$26B by month’s end. The overall market cap is sitting around the $248B mark, rebounding to September 2019 levels. Since January 2018, the total market cap is down -57%.

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 2019.

Bitcoin dominance:

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Bitcoin dominance ticked down slightly in October, but no major shift from last month. For context, the range since the beginning of the experiment in January 2018 has been quite wide: a high of 70% in September 2019 and a low of 33% in February 2018.

Overall return on investment from January 1st, 2018:

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After three straight months of loses, the portfolio gained a modest $17 in October. If I cashed out today, my $1000 initial investment would return $192, down nearly -81%.

The 2019 Top Ten Experiment is doing a bit better. If I cashed that experiment out today, that $1,000 initial investment would return $1,387, a +39% gain. Full October report to come.

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 $1,579.

That’s down about -21%.

Implications/Observations:

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 -%57 from January 2018, the cryptos that began 2018 in the Top Ten are down -81% over the same period.

At no point in this experiment has this investment strategy been successful: the initial 2018 Top Ten have under-performed each of the twenty-two 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 +15.2% since the beginning of 2018. My initial $1k investment into crypto would have yielded about +$152 had it been redirected to the S&P.

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Conclusion:

Thanks to the news out of China, October ended up breaking the streak of three consecutive months of downward movement for crypto. Again, this shows that unpredictability is the norm in crypto: we seemed on track to continue the downward trend until the end of the year. With two months left in the year, will the October gains hold?

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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