EXPERIMENT - Top 10 Crypto "Index Fund" 2018 - (Month/Episode Five - The Bears Strike Back - down 51%)
Experiment Launch Video
The Experiment:Instead of hypothetically tracking cryptos throughout the year, I made an actual $1000 investment, $100 in each of the Top 10 cryptocurrencies by market cap as of the 1st of January 2018. I'm trying to keep it simple and accessible for beginners, a type of homemade Index Fund* for those looking to get into cryptos but maybe not quite ready to jump in yet.
(*without weighting and rebalancing it's not a true Index Fund - but hopefully still helpful as a sort of a proxy for the entire market).
The Rules:Buy $100 of each the Top 10 cryptocurrencies on January 1st, 2018. Run the experiment 365 days. Hold only. No selling. No trading. Report monthly.
Month/Episode Five (May) update: The Bears Strike Back
After a hopeful April, May saw the cryptocurrency market take a turn for the worse. IOTA holds the honor of being the only Top Ten crypto to finish the month ahead, up a whopping .01 cent at the time writing. All cryptos included in the experiment are back to negative territory for the year.
May Winners - IOTA alone held its value this month, moved up two positions (from 11th to 9th), and climbed back into the Top Ten - it wins May easily. Ethereum finished second, down only about -10%. Not bad for a fairly bloody month.
May Losers - NEM and Dash were the clear losers this month, both losing -34% of their value and both slipping down the rankings (NEM one slot from 14 to 15 and Dash two slots from 12 to 14) followed closely by Cardano down -32% in May.
Overall update – Stellar continues to lead while NEM, Ripple, and Dash lag
Looking at the big picture, in many ways not much has changed since last month. Although Stellar is down -6% for the year, it is still the best performing of the original Top Ten by far. A distant second is Ethereum, down -19% so far in 2018.
After Ethereum there's a big ugly gap where it seems some of the players just fall off a cliff. There's a virtual three way tie between the absolute worst performers with NEM, Ripple, and DASH each down around -70% on the year.
Total Market Cap for the entire cryptocurrency sector:
May saw a -20% drop in crypto and the total market cap shed approximately $80B. From January 1st, the market has lost -42% or about $240B in value.
As the pattern so far this year would predict, when the overall market declines Bitcoin dominance increases as people presumably move from their alt coin positions into the more stable and well established projects. It was no different this month: Bitcoin dominance increased slightly from 37% to 38.6% in May.
Overall return on investment from January 1st, 2018:
My $1000 initial investment is now worth about $487, down just over -51%.
May was another rough month in cryptolandia, but for a little perspective just remember March was far, far worse. Stellar continues to be the project to beat in 2018 - even when it loses, it consistantly seems to lose the least. For those keeping score, IOTA's strong showing in May broke Stellar's two month streak of best performing Top Ten crypto.
Again, focusing solely on holding the Top Ten continues to be a losing strategy. While the overall market is down -42% from January, the Top Ten are down -51% over the same period of time. This approximately 9% differential is about the same as the last two months in a row. At no point in the experiment has this kind of investment in the Top Ten outperformed the overall market.
I'm also tracking the S&P 500 as part of my experiment to have a comparison point with other popular investments options. May has continued to see volatility, but as of this post it's in the green, up about 1.2% for the year.
After some nice upward movement in April, the market gave up some of its gains in May. With the political turmoil in Spain and Italy at the start of June, it should be an interesting month. If regular markets react negatively to current events, will money shift into the crypto space? We'll see.
Thanks for reading and the support for 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.
What do you think about the way the market is going this year and when (if ever) do you think we'll see a proper bull rally? Is June the month? What effect, if any, will current events in Europe have on the cryptocurrency market in June?