14 Jun 2023

Bitcoin vs. Altcoins – what has been the most profitable?

Bitcoin has been the better 'buy and hold' strategy, but the altcoin portfolio shows the potential for extra profits by timing the market or picking the altcoin winners.
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In Short

We compare Bitcoin's performance to an altcoin strategy, revealing valuable insights for investors seeking higher returns and the challenges of navigating the volatile cryptocurrency market.
Earlier this week, we asked the question:Starting in January 2015 and continuing until today, which investment strategy do you think has the best returns?1. Buy the entire top 100 cryptos by market cap in Jan 2015 - then buy every new coin that enters the top 100 immediately.2. Buy BTC every time instead.Initially, both strategies performed similarly, but in 2017, the altcoin strategy gained a significant edge due to the outperformance of Ethereum and XRP (Ripple). However, when we extended the analysis to the present, investing solely in Bitcoin proved to be the more profitable approach.Since January 2015, there have been 1,009 different cryptocurrencies in the top 100 by market cap. If you invested $1 every time a new coin entered the top 100 using the altcoin strategy, your portfolio would be worth approximately $7,000 today, demonstrating a healthy return. However, opting for the more conservative Bitcoin-only strategy would have grown your portfolio to $50,000.
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While the altcoin strategy showed greater profitability until 2018, the Bitcoin portfolio consistently outperformed it thereafter. Although the altcoin portfolio briefly approached Bitcoin's value during the Dogecoin/Shiba Inu craze in 2021, it has fallen significantly behind in the current bear market.The volatility and peak value of the altcoin portfolio highlight the potential for extra profits if one can time the market correctly or select the 'right' altcoins. However, it's important to note that less than 100 of the 1,000+ coins analyzed have yielded positive returns to date, while around 200 coins have experienced negative returns, and approximately 700 are considered inactive or worthless.
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