About

The Experiment:

Instead of hypothetically tracking cryptos, I made an actual $1000 investment, $100 in each of the Top 10 cryptocurrencies by market cap on the 1st of January 2018. The result? The 2018 Top Ten portfolio ended the year down 85%, my $1000 worth only $150.  

I then repeated the experiment on the 1st of January 2019 with the new 2019 Top Ten cryptos, then again in 2020 and 2021.

Think of the Top Ten Experiments as a lazy man’s Index Fund (no weighting or rebalancing), less technical, but hopefully still a proxy for the market as a whole – or at the very least an interesting snapshot of the 2018, 2019, and 2020 crypto space.

I am trying to keep this project simple and accessible for beginners and those looking to get into crypto but maybe not quite ready to jump in yet. I try not to take sides or analyze, but rather attempt to report in a detached manner letting the numbers speak for themselves.

This is not investing advice – as a matter of fact, the vast majority of the reports will show that the Top Ten approach under performs other strategies. This experiment is designed to be documentary in nature, describing a specific period in cryptocurrency history.

The Rules:

Buy $100 of each the Top 10 cryptocurrencies on January 1st, 2018, 2019, and 2020. Hold only. No selling. No trading. Report monthly.

FAQs

Q: You compare the Top Ten cryptos to the S&P 500.  Wouldn’t it be more fair to compare the top ten stocks vs. the top ten cryptos?

A: I’ve thought about this quite a bit (monthly actually, for the last three years): what I’m after is a total crypto vs. total stock market comparison. Tracking the Top Ten Cryptos isn’t perfect, but they usually make up about 90% of the total market. If I only tracked the Top Ten S&P 500 by weight, I would only be tracking about 22% of the S&P Index. A more fair comparison is the entire S&P 500, which accounts for 75% of the entire US market.

Still imperfect comparing 90% of one thing vs. 75% of another, but still hopefully close enough to be useful.

Q: You bought Tether?  Why?

A: I debated back and forth on whether or not to include Tether for the 2019, 2020, and 2021 experiments (Tether is not in the 2018 Top Ten). At the end of the day, these are snapshots in time, so like it or not, Tether is in the Top Ten. In some ways, this whole experiment is turning out to be much more of a documentary or picture of a particular time in crypto rather than an investing strategy. 

Plus “Top Ten Crypto Index Fund Experiments Minus Tether Plus Number Eleven” didn’t fit on my business card.

I try to be impartial, but no one gets into crypto for stablecoins. I do look back with fondness (and look forward to a future) when stablecoins aren’t in the Top Ten. 

That said, these are exciting times in crypto.  These days you can get some pretty interesting interest rates even on stablecoins, something I may factor in going forward now that I am the proud owner of $300 worth of USDT.  I may do a stablecoin spin off experiment, where I report on different interest bearing platforms (Aave vs. Nexo vs. Celsius, for example).

Q: Why bother actually buying all of these cryptos?

A:  I found actually having some skin in the game has been motivating and has helped me to complete and share my monthly updates, even when all seemed dark and hopeless.

Q: There’s got to be an easier way to get exposure to the entire crypto market, right?

A: Lots of smart people are working on it.  For example, check out what they’re working on at https://cryptex.finance

Q: How long will you run the experiments/any plans to sell?  

A: I’m still enjoying the experience, no plans to sell at the moment.

Q: I hate Coin X, why is it included in the experiment?

A: If it’s in the Top Ten on January 1st, it’s in the Top Ten Crypto Index Fund Experiment, simple as that.

Q: What about weighting?  Or rebalancing? Or selling and replacing a Top Ten dropout coin?

A:  Weighting is interesting, but to be beginner friendly, I went for an even 10% allocation when I started three years ago and have kept it up for consistency’s sake. Weighting would also lead to the rebalancing question, which is a bit advanced for this experiment.  Plus with only $100 investments, fees would eat me alive.  Similar to selling dropouts and buying ascending coins.  There’s so much movement in crypto, not worth the fees.


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