While I don’t really enjoy focusing on money when talking about cryptocurrencies or blockchain technology, many people got interested in them mainly because of impressively high gains, that are often unachievable with traditional investment methods.
Lets assume that we invested $10000 into top 10 coins ($1000 each) by market cap on 01/01/2017. Obviously this is not a strategy I would recommend trying at home, but lets see what kind of results one could get. Those coins were :
top 10 market caps in January 2017
We obviously simplify the whole operation :
- We have $1000 worth of every coin after all the transfer/purchase fees.
- We only care about the market cap — we only purchase the top 10 coins.
- We sold (HODL!) the coins today (01/01/2018)
- We didn’t care whether the coin was dipping or was sitting at an all time high which was followed by a correction on the first day of 2017 — we just bought the coins and forgot they exist for one year.
Below you can find a very simple spreadsheet created thanks to the data provided by coinmarketcap.
The strategy worked. As you can see the profits are literally insane. From our initial investment of $10000 we get $696359 just one year later. This means that our YOLO portfolio gave us a staggering return of about 7000%.
In. Just. One. Year!!!
Is this a bubble? Maybe. Will the market crash? Maybe (if you know the dates let us know in comments).
Of course as the year progressed some of the coins we purchased were kicked out of top 10, they all had their ups and downs.As of today only 5 out of 10 coins we bought remain in top 10 coins by market cap (Bitcoin, Ripple, Ethereum, Litecoin and Dash).
Market caps as of 01/01/2018
Market cap of 10th coin one year ago was equal to slightly more than $39 million. Today it is above $8 BILLION. This shows how much new money has entered cryptocurrency market since then.
The Wolf of Wall Street
What about our coins though? Which one turned out to be the best investment?
reddit.com/r/ripple /u/h4ckluserr
Our winner is Ripple (XRP) — increased in value over 330 times, giving us almost half of our profit. Over last couple of weeks XRP has increased in value from under $1 to over $2.Honourable mentions : Ethereum (value increased almost 93 times) and Dash (value increased 93.5 times).
Worst performing coins in our portfolio were MaidSafeCoin (value increased about 11 times… phew!) and… Bitcoin (value increased 14 times). However Bitcoin itself had the price of almost $1000 one year ago — it couldn’t go up in value as much as the other coins did.
Not a single one of our investments resulted in a loss.
2017 really was a wild year for cryptocurrency. Results similar to those presented above might be impossible now, but they might as well be exceeded. We will check it next year.
Is HODL the way to go?
Sadly this is only a hypothetical situation. However, looking at those numbers I am not surprised many people treat cryptocurrencies like a financial bubble.
Will it burst? As of now, we can only guess.