23 May 2023

What if - Comparing investing in crypto in 2017 to 2018

Last week, we showed what would happen if you invested in cryptocurrencies in early 2018. Investing in early 2018 was, in hindsight, the worst timing possible. Now, what if you, instead of reacting to the hype in late 2017, were ahead of the curve?
2017 vs 2018 SVG

In Short

In this article, we explore the returns on the top 10 cryptocurrencies by market cap in early January 2017. We compare the returns to if you did the same in 2018. Even though many of the coins are the same, your return would be quite different...
Let's say you, at the beginning of 2017, decided to invest in crypto. In this case, your investment return would be quite different than if you waited for 2018. Instead of a measly 6% return on the market cap-weighted buy of the top 10 in 2018, your portfolio of cryptocurrencies would be 35 times more worth than when you bought them in January 2017. In the previous article, when we invested in January 2018, several still popular cryptos would yield a negative return to date. In fact, all top 10 tokens except for Bitcoin and Ethereum would produce a loss. This story changes drastically if we instead invested one year earlier. The table below is a snapshot of the top 10 cryptocurrencies by market cap on January 1, 2017. The top 6 coins are likely to be familiar to many and still lie within the top 50 by market cap today. In places 7 through 10, there are cryptocurrencies you might be unfamiliar with if you came into the crypto space later.
top 10 market cap Jan 2017 SVG
The three most valuable coins by market cap on January 1, 2017, were the same a year later. Hence the same coins make up most of the weight of the portfolio. Still, by investing a year earlier, your returns are astoundingly different—the why is easily seen when we plot the returns of the individual cryptocurrencies since January 2017. Cryptocurrency valuations grew tremendously through 2017 and were, in many cases, higher in early 2018 than now. Comparing returns from January 2017 until today, we see that Ethereum would give you a 220x return on investment and even XRP a huge 70x. Bitcoin comes 3rd at 30x, while mainstay coins Litecoin, Ethereum Classic, and Monero all would return between 10 and 20x. Interestingly, even coins that have fallen way out of relevance have positive returns from January 2017 until today.
January 1 2017 top 10 returns SVG
To round off, let's see the performance of the top 10 portfolio compared to Bitcoin and the S&P500. Unsurprisingly, the massive returns of Ethereum drive the market cap-weighted portfolio above a pure Bitcoin play. And comparing to S&P500 from early 2017 is no comparison at all.
January 1 2017 returns SVG
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