Seeing as Bitcoin holds the title for being the top investment in the world over the last decade, outing stocks, commodities and any other such asset by milers, it would be safe to assume that the top 10 cryptocurrencies would be a good portfolio.
Through 2019, this was indeed the case as the top 10 coins outplayed the stock market through a year in crypto that was both up and down, and in a year which was mostly positive for the stock market.
A look at the yearly gains for the S&P 500 shows that an investor would have walked away with 35 percent gains, but in an index of the top 10 coins, the gains would have been around 54 percent in 2019.
This experiment was undertaken by an investor, who goes by the username Joe-M-4 on Reddit. He said in his “The Top 10 Crypto Index Fund Experiment” post that had he conducted the same experiment with the S&P 500, his investment would be $1,350—a 35% increase.
“Despite a tough month, the 2019 Top Ten are +54% and still well ahead of the stock market,” he said in the post. Joe’s referring to the market pullback last month, when this summer’s bull run appeared to come to a close.
Joe’s experiment showed that many of the cryptocurrency assets he invested in—Bitcoin, Ethereum, Bitcoin Cash, EOS, Bitcoin SV, Litecoin and Tron—are up since January 2019. But the rest, Stellar and XRP, are all down. Tether, the US dollar-pegged stablecoin, stayed the same.
However, this is not an ongoing trend as the experiment was carried out in the bearish year of 2018, and has been ongoing this year as well. He conducted the same “experiments” in 2018 and 2020. Combining all results, the stock market is winning—for now.
The $3,000 invested in crypto for the three experiments so far has gained 11%—making the initial combined investments now worth $3,340. Though if Joe had put his $3,000 in the S&P 500, it would be worth $3,660, a gain of 22%.
There is an ongoing debate about the correlation of Bitcoin to the stock markets and if the coin can act as a hedge or if it is in fact just another asset that follows traditional market trends. There has been evidence both ways in the fact that Bitcoin has crashed alongside the stock market, but it has also risen in hard times.
Bitcoin is yet to be a truly independent asset free of market conditions, but it is not exactly correlated and can move differently. More so, although most top 10 coins usually follow Bitcoin’s path, there is a chance that some of these go on a tangent themselves and take different routes.