Which was better in 2019? Slow and steady returns from the stock market, or an investment in the Top 10 cryptocurrencies?
The results are a little depressing for crypto tragics (like Micky) and demonstrate your annoying parents, friends and annoying financial advisors may have a point about the relative safety of stock market investments versus crypto markets.
Joe-M-4 bought $100 of each of the Top 10 cryptocurrencies at the start of 2018. He then repeated the experiment with the Top 10 coins in 2019.
Both years he would have been better off putting his cash in the stock market.
The ten coins he bought in 2018 are now down by 85% to be worth a paltry $150 if he cashed out today.
By contrast he says he would have $1175 today if he’d put the money into the S&P 500.
To put it another way, he would have made more in profits on the stock market ($175) than he has left of the entire capital he invested in crypto at the start of 2018 ($150).
Hold on, that was the All Time High
But hang on, I hear you say. That was the All Time High. It proves nothing.
Well, the result of this year’s experiment has been a little more encouraging.
Joe reports that if he cashed out today, his initial investment in the Class of 2019 Top 10 coins would be worth $1100 – meaning he’s made 10%.
Unfortunately S&P 500 is up 24% in the year to date, so for the second year in a row, he would have made more money (more than twice as much in fact) by investing in safe, boring traditional equities.
That’s barring a Christmas miracle (and crypto often goes crazy in December) or a stock market plunge due to the US China Trade War.
Crypto returns CAN beat the market though
Don’t get too upset: If he’d put his money into Bitcoin at the start of the year he would have doubled it.
Even putting the cash into Ethereum, which has struggled this year, he still would have made 16% – or more than he made from his portfolio of alts.
But the experiment shows the danger of ‘diversifying’ with the Top 10.
“As always, the experiment’s focus of solely holding the Top Ten Cryptos continues to be a losing approach,” he wrote.
“While the overall market is down -%66 from January 2018, the cryptos that began 2018 in the Top Ten are down -85% over the same period.”
“The initial 2018 Top Ten have under-performed each of the twenty-three months compared to the market overall.”
Perhaps not surprisingly, he says he’s “undecided whether or not to repeat the experiment yet again in 2020.”