Analysis

Reddit User Bought $1000 worth of Cryptocurrencies on January 1, 2019 Updated his Audience



A reddit user chronicled his trading experience by investing $1,000 in different cryptocurrencies on January 1, 2018 for one year. He then repeated the same experiment again for the last calendar year, hodling crypto between January 1, 2019 and December 31, 2019 and updated his audience at the turn of the year.

Cryptocurrency trading has many different approaches. Some of the traders prefer to do HODL for a specific amount of time or when their target price has been reached and others prefer a more daily trading approach. Due to the continuing see-saw nature of the cryptocurrency price index, both of these basic approaches have their advantages and disadvantages.

Rules Followed

Instead of buying the top cryptocurrencies randomly, the Reddit user had a few initial rules at the start of this experiment and they were:

  1. Only the top 10 cryptocurrencies based on global marketcap on January 1, 2019 are to be invested in.
  2. $100 to be reserved for each top 10 cryptocurrencies.
  3. The investment will remain unchanged till the end of the year.

This was a smart way to show the behaviour of these cryptocurrencies on a year-to-year basis based on the equal amount of investment dedicated to each cryptocurrency. This would remove bias towards the larger cryptocurrencies like Bitcoin and Ethereum and give opportunities to smaller market capped competitors to showcase their long-term worth.

Results

At the end of the year, only a paltry increase of $17 was observed by the Reddit user in the overall balance of the user and his total investment was showing $1017. Despite the roller-coaster ride of the cryptocurrency especially in October and September, the end of the year’s bearish run almost wiped out previous gains. The investment was up a maximum of 119% in May of this year but eventually the price pulled back to this value.

Interestingly, Bitcoin is up by more than 89% in 2019. The largest cryptocurrency by trading volume and market capitalization had a whirlwind year as usual but ended up almost double in the end. Litecoin (34%) and Bitcoin Cash (22%) remained the only other coins that posted significant gains.

Some coins like Ethereum, Bitcoin SV and stablecoin Tether all remained mostly unchanged at the end of the year with negligible differences.

However, the gains posted by Bitcoin, Litecoin, EOS, BCH and stable values of Etereum, Bitcoin SV, etc were wiped away by the monumental losses suffered by investments in Tron, Ripple, and Stellar. They finished the year at -33%, -46%, and -61%, respectively. Tron and Stellar both fell below the top 10 cryptocurrencies by market capitalization as well, thus rendering them disqualified from the 2020 experiment. This is especially damaging for Stellar as it had been one of the top performers of the 2019 experiment.

At the same time, here are some year-end stats for cryptocurrencies:

  • Since January 2019 – the total market cap for crypto has increased +49%

  • Worst Month – January 2019 ($114B total crypto market cap)

  • Best Month – June 2019 ($321B total crypto market cap)

  • The last time the total market cap reached $300B: August 2019

  • The last time the total market cap reached $200B: November 2019

Conclusions

  • Bitcoin remains the dominant cryptocurrency by market capitalization
  • The growing overall market capitalization shows great promise for the crypto future
  • Smaller coins have a tendency to become bigger losers in the market

image source: pixabay.com



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