5 years of the ‘Top 10 Cryptos’ experiment and the lessons learned – Cointelegraph Magazine

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When Redditor Joe Greene started the Top 10 Cryptos experiment in 2018, he bought $1,000 of Dash, NEM and Iota, among others, only to see it crash to $150. But five years later his experiment paid off big.

The rules: Buy $100 of each of the top 10 cryptocurrencies on January 1, 2018, 2019, 2020 and 2021. Hold only. No selling. No business. Report monthly.

Every January since 2018, Greene has reviewed a list of the top 10 cryptocurrencies by market cap from his tropical office in Bali. He puts $100 of his own money into each, tracks the performance every four months or so, and publishes the results on his website and on Reddit.

When he started, crypto indexes were few and far between, so there was no easy alternative. Having invested in stocks for years before moving into crypto, Greene predicted that chasing tokens on a hot streak was dangerous – unless done consistently – and this was indeed proven by his experiment with the Top Ten Crypto Index Funds.

Bitcoin 2017

Like almost everyone else that year, Greene was mesmerized by the sudden rise of Bitcoin during the 2017 bull market. “I remember looking to buy a rig to do some mining, but it turns out they were all sold out. So, I thought, ‘Whatever, I’ll just go out and buy some coins instead,’” he tells Magazine. A combination of the underlying technology, the financial elements and the future direction of the active class kept Greene in the sector. He has been blogging with the project ever since.

At first, Greene was relatively new to crypto as his audience. He explains:

“I went through Reddit and some online articles, and they were all pretty much shilling disparate returns, although there were a few diamonds in the rough.”

In the face of uncertainty, Greene decided to stick with his normal investment philosophy of holding what he bought and refraining from excessive trading. “Outside of crypto, I am not a trader, and I am convinced that very few people are traders. Something like only 0.5% of traders are profitable in the long run,” says Greene. “So, yeah, I’m not a trader. And I learned my lessons a long time ago.” Greene’s basic philosophy is that it’s safest to invest in low-cost, ultra-diversified index funds — which is also Warren Buffett’s advice for most investors. But there just wasn’t anything like it at the time in late 2017. So, Greene decided to make his own.

Greene provides regular updates on its portfolio performance, and has done so for the past five years.
Greene provides regular updates on its portfolio performance and has done so for the past five years.

Winner takes all

The thinking was that, like stocks, cryptocurrencies also exhibited signs of “winners take it all”, where over a long period of time, the winners keep winning and the losers keep losing in terms of investment gains. After all, the best performing cryptocurrencies attract all the media attention, Google searches, institutional interest, retail euphoria, etc. So, Greene theorized that for individuals who didn’t know much about the crypto space, their best bet was to just stick with it. the best players and be consistent about it.

And so, from 2018 onwards, Greene compiled a list of the top 10 cryptocurrencies on CoinMarketCap at the beginning of each January and tracked their performance over time.

Greene says the best lesson he learned during this period is the power of dollar-cost averaging — buying an asset regularly without any regard for its market price. This smooths out the volatility in the purchase price and brings it closer to the average price during the period in which it was purchased.

“What goes up doesn’t always stay up, but the risks can be mitigated by monthly rebalancing,” he said. “My initial portfolio in 2018 consisted of tokens such as Dash, NEM, Iota, etc. Although there was a bull market from 2020 to late 2021, none of the tokens I talked about managed to regain their all-time high prices witnessed five years ago. But there were rallies later, and if you stick with rebalancing, you’ll do well.”

Top Ten Cryptos bought in 2018 still haven't recovered to their all-time highs
Top Ten Cryptos bought in 2018 have yet to recover to their all-time highs.

Crypto winter OG version

In fact, when Greene put $1,000 into each of the top 10 cryptocurrencies in January 2018, his portfolio slipped to be worth less than $150 just 12 months later.

However, patience is rewarded, and for someone who consistently invested $1,000 in the top 10 cryptocurrencies by market cap every January from 2018 onwards, the model portfolio would have returned a cumulative 87%. During the same period, the benchmark S&P 500 would have given 24%.

Greene's portfolio performance on a cumulative basis.
Greene’s portfolio performance on a cumulative basis.

Greene points out that the strategy of sticking to the big winners — if done consistently — would work in the long run. The 2019, 2020, 2021 and 2022 Top 10 crypto portfolios he tracked have returned +126%, 338%, +177% and -69% (unsurprisingly) respectively, so far, essentially offsetting any poor performance made during the bear market. years .

The same experiment, carried out in 2019, gave good results
The same experiment, carried out in 2019, gave good results.

“It’s not something sensational, like how Twitter shills claim you can get 10,000% in a week by putting your life savings into crypto,” he says. “For any type of index, you’re never going to get the best performance, but it will protect you from the worst possible outcomes.”

Greene elaborates that his method would work better if the index could track the entire market, and not just the top crypto. “During the same period, a market-wide crypto index would have given a 224% increase,” he stated.

“That’s the beauty of index investing. I have a normal job and a family to take care of. Because of that, I can’t spend 10 hours a day like on Twitter and Discord and try to figure out which crypto is going to go up. me too suck at NFTs. So, we need an investment method for ordinary people whose lives are not dedicated to crypto.”

Greene’s experiment and methods have attracted a lot of interest among the crypto-curious on social media. When asked about any interesting investing behavior or trading pattern he’s observed among his followers over the years, Greene says there are a lot of people who look at price movements with the benefit of hindsight: “It’s like saying, ‘Hey, I bought Doge because. it went up, you should get it too.’ I can’t answer that, and they’re right. But the trick is to predict it.”

Top Ten Cryptos
Spoiler: The lesson was not to invest in anything in January 2018.

There were also many surprises: “A lot of Bitcoin fans switched to Ethereum over the years, to start with. Then there was BNB Coin, nobody really expected that coin to become big, and I think even the CEO of Binance, Changpeng Zhao, didn’t expect that.”

On his blog, Greene also has a section dedicated to financial literacy, stressing that retail investors should track their bills and have their finances in satisfactory condition and never risk more than they can afford to lose. His approach means that he has become acquainted with people of a more “conservative mindset”.

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“There are people who don’t day trade crypto,” he explains. “And I tell them: ‘Don’t throw everything you have into crypto – that’s a bad idea.’

A decade of Top 10s

Greene plans to continue Top Ten Crypto Index Funds until it hits a decade or more. “After all, I have a family…and a full-time work commitment that can be quite stressful at times.”

Greene's experiment for 2022 was in a downward spiral
Greene’s experiment for 2022 was in a downward spiral.

But Greene cautions that while the cumulative performance of the experiment has been good, it’s important to be alert to sharp declines: “Take this year: There are now four stablecoins in the top ten lists. It’s a little boring, so I’d have to shake things up a bit ,” he says, adding, “But I should probably stick to what I know best. I also tried this year to get a bonus at DeFi. It was 130 dollars starting with USD Coin that I traded for TerraUSD, just for fun, and then I sent it to anchor on LUNA, which crashed spectacularly.”

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