Today, Bitcoin is approaching 20 thousand dollars, and the situation in the cryptocurrency market is not getting better. In particular, in the niche there are rumors about the possible insolvency of the largest crypto fund Three Arrows Capital, the presence of problems of which has already been indirectly confirmed by the head su Zhu. This may be the reason for the sale of the fund’s assets, the closure of landing platforms and a large-scale cascade of liquidations. In other words, what is happening now is definitely not encouraging. And what about investors who bought on the first of January 2022 and have not touched their own coins since then? Tell.
Речь пойдёт об эксперименте пользователя платформы Реддит под ником Joe-M-4. Если вкратце: ежегодно первого января он вкладывает по 100 долларов в первые десять криптовалют по рыночной капитализации, после чего просто следит за ситуацией и отчитывается о происходящем. Впервые такое было проделано в 2018 году, причём 2022 год не стал исключением.
This year, the author traditionally purchased crypto assets that were in the top ten coins as of the first of January. They were BTC, ETH, BNB, SOL, ADA, USDC, XRP, LUNA, DOT and AVAX. Again, in each of the cryptocurrencies, the blockchain lover invested $ 100, that is, the total investment amount was a thousand dollars.
Below we tell you how things are with investing in general, how much money is lost irretrievably, how the investment behaved in comparison with the S&P500 index and not only.
How to lose and earn on cryptocurrencies
As the author of the experiment, who shared his intermediate successes this morning, notes, May 2022 turned out to be one of the toughest months. In particular, the thousand invested on the first of January has now turned into 342 dollars. Accordingly, the overall subsidence was 66 per cent.
Here are the results in the form of a table.
General results of the crypto experiment in 2022
It indicates the coins purchased, their value as of the first of May and the first of June, the change in the amount compared to the first of January, as well as the percentage of change and the current dollar amount for each coin.
По словам инвестора, месяц прежде всего запомнится коллапсом LUNA, из-за чего одна из вложенных сотен уже обвалилась до нуля. Ничего подобного за 4.5 года эксперимента ещё не случалось.
For clarity, he provides a table with the place of each cryptocurrency by market capitalization as of the first of January, May and June. Here, the position of LUNA has changed most noticeably, which, against the background of its collapse, moved from 8th place to 214th.
Changes in the positions of selected cryptocurrencies in the overall rating of coins by market capitalization
In general, AVAX and LUNA dropped out of the top ten at the end of the month – they were replaced by BUSD and DOGE.
Как отмечает автор, за время эксперимента ни одна монета ещё не теряла так много позиций в общем рейтинге. Второе место в этом контексте принадлежит NEM, который находился в первой десятке в 2018 году, но в итоге откатился на 88 позицию.
Since the beginning of the year, Bitcoin has sunk by 36 percent, BNB ranks second with a 41 percent collapse, while the third position belongs to Ethereum ETH. It’s down 51 percent.
In April, the investor’s portfolio lost $ 214, but the amount of losses in May was much greater – $ 420. Here is a visual table with results for each month. That is, the least painful was March 2022.
Interim results of crypto experimentation by months in 2022
How to lose money on stablecoins
In years past, Joe-M-4 did not include stablecoins in the report, since it was almost impossible to make money on them. However, now it can be done – primarily with the help of various platforms that allow you to borrow your own money and receive interest for it.
В начале года автор использовал USDC на платформах BlockFi и Nexo. Однако потом его внимание привлекла другая площадка, что в итоге закончилось полной потерей средств.
Guess how that happened? That’s right, the investor converted USDC and UST and then placed them in Anchor from the Terra ecosystem. Then the platform promised an incredible 18 percent per annum, which is what Joe bought.
As a result of the collapse of the Terra ecosystem and the collapse of the UST, the then 100 USDC is now valued at $1.6. That is, the author lost 99 percent of the investment on the stablecoin, which, again, is a rather unexpected result given the purpose of the stables. Here are the intermediate results of working with the USDC and the final collapse.
Results of the crypto experiment with stablecoin
The author also mentioned bitcoin’s dominance indicator, that is, the share of its capitalization in the total market capitalization. According to Joe, it is necessary to monitor this indicator, as it speaks about the appetite of investors in relation to Bitcoin and alts.
Иначе говоря, чем выше доминирование BTC, тем меньше внимания альткоинам уделяют инвесторы.
Chart of Changes in Bitcoin’s Dominance in 2022
Now the BTC indicator. D is 46.1 per cent.
How much you can earn and lose on cryptocurrencies
Joe also compared the interim results of 2022 with previous years. The situation with experiments looks like this:
- in 2018, the invested thousand turned into 683 dollars, that is, investments sank by 32 percent;
- in 2019, a new thousand against the background of a 238 percent increase turned into 3376 dollars;
- in 2020, the coins jumped by 381 percent, causing the investment to reach $4808. As the author notes, this is the best result of all time;
- in 2021, the new thousand grew by 99 percent. The total result was 1991 dollars;
- in 2022 investmentate 66 percent, that is, 1000 turned into 342 dollars.
А значит по итогам года Джо фиксировал результат изменений с каждой тысячей — общая сумма вложений достигла 5 тысяч долларов — и изолировал их. Как он отмечает, сейчас по результатам 4.5 года все инвестиции составляют 11 200 долларов. Это 124 процента роста.
Here’s a change in his overall portfolio on the chart.
The effectiveness of the invested 5 thousand dollars within the framework of the crypto experiment
Comparison of cryptocurrencies and stocks
The author of the experiment also compares his results of interaction with crypto with traditional finance in the form of the S&P500 index. Since the beginning of 2022, the latter has sunk by 14 percent, that is, the conditional invested thousand would have turned into 860 dollars.
Now let’s imagine that we have invested a thousand dollars in the S&P500 index in the same way since 2018. Here are the results:
- in 2018, the invested thousand would have turned into 1530 dollars as of today;
- from 2019, the amount would grow to 1640 dollars;
- from 2020, a thousand would grow to 1270 dollars today;
- from 2021, the figure would increase to $ 1,090;
- from the beginning of 2022, a thousand would have sunk to $860.
So, invested 5 thousand dollars on the first of January each year would now cost 6390 dollars. That’s a 28 percent increase. Recall that the experiment with crypto has so far brought the author 124 percent.
Here is a graph comparing crypto attachments (in blue) and the S&P500 index (in red).
Comparison of investments in cryptocurrencies and stocks
Мы считаем, что подобные эксперименты наглядно показывают, насколько прибыльными могут быть криптовалюты — причём даже при относительно сдержанном подходе к вложению. Также они дают понять, что цифровые активы в состоянии приносить значительно больше, чем традиционные финансы. И это — с учётом волатильности, которую так ненавидят банкиры и чиновники.
The conclusion from the experiment is obvious: the crypt is worth contacting it. The main thing here is to be patient and be prepared for the unexpected. However, with the right approach and the absence of emotions along with greed, everything can turn out quite well.
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