An anonymous trader bought the ten best cryptocurrencies worth $1,000 on January 1, 2018 and regularly monitored the performance of the portfolio.
The largest crypto assets at that time, by market value, were: Bitcoin, XRP, Ethereum, Bitcoin Cash, Cardano, Litecoin, IOTA, NEM, Dash and Stellar.
Crypto Portfolio At 80% Loss
The investor invested $ 100 in each of the top ten crypto assets and measured their performance over time. As of June 1, 2020, the $ 1,000 portfolio was worth $ 205.19.
Since Bitcoin’s price fell from $ 13,170 to $ 10,112, two years and five months later, there was a 79.48% loss in the total portfolio. As of June 13, the $ 1,000 portfolio fell to less than $ 200, due to a 9% drop in June 11.
The $ 1000 portfolio was created after Bitcoin fell to $ 13,170, which dropped by 34% from its peak of $ 20,000, its highest price.
In other words, capital was created at a time when retail investors reasonably thought to invest in cryptocurrencies. In this period, cryptocurrencies received high demand from retail investors in three key regions: China, South Korea and Japan.
The demand for cryptocurrencies was so high that the bitcoin premium in South Korea’s crypto market exceeded 20%. If Bitcoin is trading around $ 20,000 worldwide, Bitcoin price in South Korea has risen to $ 24,000.
In January 2018, prices of crypto assets dropped with increasing regulation from governments. Therefore, retail investors who did not enter the market before the 2017 rally may have thought that it may be a challenging time to invest in cryptocurrencies.
Most Cryptocurrencies Fail in Long Term
From the end of 2017 to the beginning of 2018, it was the time when even industry executives and cryptocurrency developers thought that their crypto assets were overvalued.
Vitalik Buterin, the founder of Ethereum, said he did not believe that the crypto ecosystem was successful enough to achieve a $ 500 billion valuation during the all-time high of Bitcoin.
Crypto assets, including Bitcoin, are increasingly becoming value storages over time. However, most cryptocurrencies are still experiments with a significant risk of failure in the long run.
Of the top ten cryptocurrencies mentioned above, only six remained in the top ten as leading assets. Bitcoin has seen a noticeable increase in corporate adoption, improved infrastructure, increased liquidity, and strengthened foundations over the years.
Still, the performance of the $ 1000 portfolio; It shows that investors should approach their crypto assets carefully when investing with a long-term thesis, like other high-risk assets.