Reddit Analysis: Top 10 Coins For Each Year

Reddit users have recently and separately posted their full analysis, cumulatively dating back to 2013, identifying the biggest gainers and losers across 2,000 different cryptocurrencies to find a way to index the entire market that gives you the best chance at making money. Honestly, this information is so good that we have to talk about what they found, because I have a feeling it's going to help you out tremendously.

All right, so the first analysis worth exploring is from the Reddit user Milo Newtograin, who did a full analysis in the top 200 coins in January of 2020 to determine which ones did the best with returns of more than 10,000 percent and which ones did the worst, leaving you with absolutely nothing. By the way, before we go into these details, I'll link to all of his information down below in the description, including the original Reddit thread, because trust me, this information is really insightful.

It all starts with the analysis of the top 200 coins beginning in January of 2020. What I found really surprising is that out of the 200 coins, 120 of them are no longer on that list, meaning almost all of those ranked in the second half between 101 and 200 have not kept up with the market and have fallen. Now, as he mentions, it's an important distinction that market cap ranking isn't always a correlation with price. For example, if coin 10 has a market cap of 30 billion dollars and trades for one dollar each, it's still possible for it to lose its ranking simply because other coins do considerably better, even if it's still worth the very same 30 billion at one dollar each one year later.

Now, in terms of the others, though, it does appear that the top 50 coins have more or less stayed exactly the same, with over 90 percent holding their ground and growing in price. Next, in terms of the top 2020, after one full year, only one of them is entirely gone, and that would be G999. Now, since I had never heard of this one before, I started doing some research, and after a minute, it became very clear that the whole thing was a blatant pump-and-dump scam from the very beginning. It was created as an obscure altcoin whose only achievement was being listed on CoinMarketCap and Etherscan, and their trading volume was fabricated to gain enough momentum to begin generating some excitement for it to turn into a full-fledged MLM. But regardless, it still made its way into the top 20 before eventually now being worth nothing.

The third, according to this analysis, unlike stocks and pretty much every other rational investment out there during this time frame, it actually appears that diversification would have hurt and lowered your return. What's most interesting is that within the top 200, the majority of the gains were concentrated in the top two, or basically just Bitcoin and Ethereum. Even though the others certainly did well by most standards, with an average return of about 1,000 percent overall, Bitcoin and Ethereum really carried the majority of the market, and you would have been best off just investing in those.

And fourth, since everyone typically hears stories about someone investing a few thousand dollars and turning it into millions, the reality is only five have seen a return in excess of 10,000 percent out of 200 different options. Meaning if you're randomly investing, you have a two and a half percent chance of picking the right one, with the losers severely impacting your return. More often than not, the losers go down by a lot, and in this case, the average drop was anywhere from 90 to 100 percent, which is not good.

Now sure, overall, had you bought into each of these 200 cryptocurrencies equally, you'd have seen an average return of 1200, which is nothing to sneeze at, especially considering that the S&P 500 was up 31 during that same time frame. But you would have done almost just as well by sticking with the top two, and that's it. Otherwise, you're betting on the one in 50 chance that you're gonna get a ten thousand percent gainer, with the risk, of course, of losing everything.

But it doesn't stop there. The same user took it even further and analyzed the market over the last four years, beginning in November of 2017, right as the cryptocurrency market was about to explode, just to see how many of them are still around today and how much you would have made had you invested your money. Now, even though the total market cap has increased about 10 times from 231 billion to 2.6 trillion, only eight coins have stayed in the top 30 from then until now.

What's also interesting is that Bitcoin's dominance is relatively unchanged, even though other options like Ethereum and meme coins have begun chipping away at some of that market share. And third, in terms of the other options within the original 2017 top 30 list, 10 of them have still seen a slight increase in market cap. Although as other new options are introduced, they take over new spots and bump the old ones further down the list.

But today, here's how those top 10 fared and what would have happened had you invested 100 in each beginning on January 1st, 2018. With Ripple, your 100 would now be worth three dollars for a loss of fifty-seven percent over the last four years. A hundred dollars in them would now be worth fifteen dollars and forty-eight cents, an eighty-five percent loss. A hundred dollars in Ardor would be worth eighteen dollars and fifty-seven cents, an eighty-two percent loss. Since I'll save you the time of spelling each of these out one by one, here are the results in total: you would have invested a thousand dollars, and today you would have seven thousand five hundred and twenty-two dollars and sixty-two cents, which, let's be real, that's incredible, even though 80 of those choices have lost an average of over 50.

So as we could see with cryptocurrency, past performance is not an indicator that it will continue to do well in the future. However, what if there's another strategy out there that works even better? And that's what brings us to our second Reddit user, Joe4M. He runs a blog called top10cryptofun.com, where he tracks investments within the top 10 cryptocurrencies on a regular basis since January 1st, 2018. As we're quickly approaching the four-year mark, his returns and strategies should give us a lot more insight into exactly how and where the biggest gainers come from.

See, instead of buying into the top 10 performers like we had just described, he decided to invest a hundred dollars into the top 10 coins beginning on December 31, 2017, and then he just let it ride for the entire year. Now, just off the top of your head, how much do you think this experiment made him in the following 12 months? Do you think it's 2,000, 4,000, 5,000? Well, if you had said an 84 loss, you would be right. His 1,000 investment now turned into a 150 amount, with some seeing a total loss as high as 94 percent. Back then, even the almighty Bitcoin fell 70, and four of the top 10 original coins were no longer in the top 10 by the end of the year.

So 2018 was bad, but you know what they say: when you get knocked down, do it again. On January 1st, 2019, he repeated the experiment again by buying another 100 each into the top 10 coins. However, this time there was a bit of a difference: Cardano was replaced with EOS, IOTA was replaced with Tether, Dash was replaced with Tron, and NEM was replaced with Bitcoin SV. So how did that do? Well, in 12 months, during a time where the S&P 500 was up 29, the cryptocurrency portfolio was up 1.74. That's it.

However, he's not stopping that easily. And, you guessed it, he repeated the process again in 2020. Even though there were a few new coins being added to the list, for the most part, they were exactly the same, and with the exception of five losing value, including Ripple, which got hit really hard when the SEC got their hands on it, the ones that did well did really well. That's what led to an overall return of 139 throughout the entire year. It was at this point throughout the last three years that his return was beginning to catch back up to the S&P 500.

Now, in 2021, everything appears unstoppable. Again, on January 1st, 2021, he invested 100 each into the top 10 coins. What's amazing is that literally all of them are positive for the year, with the total return of nearly 5,000. Not to mention if we now combine all four years together, holding them equally the entire time, we could see that all of them are now up a significant amount with even the previous 2018 portfolio going from an 85 loss to a 72 gain. When you put this together, he mentioned that this averages a 514 return compared to the S&P 500's return of 56 during that same time frame.

Now for anyone interested in following along, I'll post his information and his blog down below in the description because he posts a monthly update that's really good to read. But in terms of what you could do with this information, here are the investment strategies that I personally found to be the most realistic. Enter the Market Sentiment blog; this is someone who I've had the pleasure of working with over the last few months. I gotta say, his analysis is unparalleled.

He's previously analyzed the best times to buy an IPO, whether or not Wall Street Bets could beat the market, if you should follow Congress's stock picks, and which stock predictions wind up doing the best. But this time he analyzed cryptocurrencies to try to find the best way to beat the market without winding up with the next Squid Game and losing everything. To do this, he extracted the daily trading data across 317 different exchanges and 1985 coins to find the commonalities based on historic price, market capital, and trading volume, going all the way back to 2013.

The result was extremely surprising. On the surface, he found that when you compare the first listing price on an exchange with the current price available today, only 40 percent of them have gained value. That's it. So right off the bat, if you blindly buy into everything that comes available, expect about sixty percent of them to lose value or break even at the very best. However, even though only forty percent of cryptocurrencies actually go up in value, as I'm sure you've noticed, the ones that go up do really, really well, and the average gain across the winners was 3048.

Now, even though that sounds like a ton, what's even more interesting is how much of that is driven by a few outliers that just skyrocket to the moon, because if you remove the top one percent of cryptocurrencies from that gain, your return drops down to 641 percent. If you remove the top five percent, your overall return would be similar to investing in the S&P 500. That means even though forty percent of cryptocurrencies go up in value, only two percent of those actually earn enough to push your return up higher than the stock market long term.

And 98 percent of the time, you would have been better off just being a boring stock market index fund investor instead. Although, in terms of a viable investment strategy to try to capitalize on that two percent that goes up a lot, here's what he found. According to Market Sentiment, based on past performance, the most reliable method of investing is simply to buy an equal amount of the top 10 coins every single month and then doing absolutely nothing. That's it.

The goal is to create a strategy that anyone could do that doesn't take a lot of work, that isn't reliant on luck or Elon Musk tweeting about it, while still keeping the largest coins that are least likely to be a rug pull scam. He also mentions that by doing an equal split, you are taking on much higher risk, as you are investing in relatively smaller cryptos, and you are being rewarded for that extra risk you took. As you could see, a long-term hold, regardless of the year you first invested, has so far produced a positive return in excess of that of the stock market.

Keep in mind, just like we saw in 2018, it is possible to create a portfolio like this that subsequently drops 85 percent in value and may never recover. But if you believe in the market long term and you have the extra cash to risk and hold without panic selling, then maybe allocating a small amount of your portfolio to this experiment could give you a positive return if you have the patience. Just remember, the market has and will see significant drops along the way with no guarantees of ever coming back.

So just don't go and YOLO everything you have into the top 10 coins with the expectation of trying to buy a mega yacht the next year. But in terms of the most sound investment strategy that I have seen, this one at least seems the most reasonable. However, one more thing to consider is that throughout the top 10, historically, the biggest returns have mostly come from both Bitcoin and Ethereum, which throughout the last four years would have given you a 548 and 1421 return, respectively, just by investing 100 a week consistently.

Of course, for those who want to dip their feet in cryptocurrencies for the first time, this statistically is probably the safest approach, but the more you begin to wander from the top five, as every study has shown us, the bigger the risk and the bigger the reward. So with that said, you guys, thank you so much for watching. Also, feel free to add me on Instagram and to my second channel, The Graham Stephan Show. I post there every single day I'm not posting here, so if you want to see a brand new video from me every single day, make sure to add yourself to that. Thank you so much for watching, and until next time.