The Best Cryptocurrencies for Long-Term Investment
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Analyzing the top 50 cryptocurrencies of the last 4 bull markets and interpreting their performance trends from historical data.
In this post, I will analyse how the performance of the top 50 cryptocurrencies of the past 4 bull markets developed in the period from April 2013 to July 2021(altogether 128 coins and tokens) and which trends or patterns can be derived from it.
The Outset
As a basis for this analysis, I used the rankings on Coinmarketcap of the individual coins and tokens. The rankings made it possible to track the performance of individual coins and tokens over time and in relation to the others.
Since there are thousands of cryptocurrencies, I made some restrictions in order to keep the effort involved in the analysis tolerable. I dealt purely with those coins and tokens that, according to Coinmarketcap, were among the top 50 at the high points of the last 4 crypto bull markets.
As shown in the image below, the last 4 crypto bull markets peaked at the following times:
- December 2013
- December 2017
- June 2019
- November 2021
To identify the top 50 of each bull market, I used historical snapshots provided on https://coinmarketcap.com/historical/.
Since some cryptocurrencies (e.g. BTC, ETH) were in the top 50 in several bull markets and had, therefore, been counted multiple times, the final number of individual coins and tokens taken into account for this analysis was 128.
It would have been possible with the Coinmarketcap snapshots to track the rankings of the 128 cryptocurrencies in the period examined. However, the amount of work involved would have been enormous, so I pulled the required data from a dataset on Kaggle. In addition to the rankings, this dataset also contained various categories (e.g. main use cases) which Coinmarketcap uses for the various cryptocurrencies. I also took some of them into account in the later analysis process.
The Kaggle dataset was several hundred MB in size, so I used the data analysis and manipulation tool pandas on Python to do a data cleanup. In the last step, I merged the cleaned data into a data visualization tool.
Limitations of This Study
Before we get to the results, let’s talk briefly about the limitations of this analysis.
- The dataset from Kaggle I used contains data on cryptocurrencies listed on Coinmarketcap from April 2013 to July 2021. This means that data for the last 12 months is missing.
- While I believe the quality of the dataset I used to be of a high level, I cannot rule out that some of the data contained therein might be incorrect or incomplete (see more details below when I interpret the individual charts).
- It is also possible that I made errors when processing the data.
Results
The following 10 charts visualize the findings of my analysis.
Note: The charts are all in log scale for the sake of easier presentation.
Chart 1 shows the performance of the top 50 cryptocurrencies (red) of the 2013 bull market. As can be clearly seen, all but a few exceptions (e.g. BTC, XRP) have disappeared almost into insignificance.
Chart 2 shows the performance of the top 50 cryptocurrencies (red) of the 2017 bull market. We get a very different picture since a large proportion of them have stayed in the top 100.
Chart 3 shows the performance of the top 50 cryptocurrencies (red) of the 2019 bull market. At this point, not many new contenders were making their way into the top 50, and most of them didn’t last long there either.
Chart 4 shows the performance of the top 50 cryptocurrencies (red) of the 2021 bull market. Since the peak of this bull market was not included in the dataset, the picture remains incomplete. However, we can already see the coins and tokens beginning to cluster in the upper area.
Chart 5 shows the performance of the top 10 cryptocurrencies (yellow) of all 4 crypto bull markets since 2013. Strikingly, cryptocurrencies, once established in the top 10, remain there for a very long time. Exceptions include some of the top 10 coins from the 2013 bull market. Since the bull market of 2017, however, there has been relatively little change at the very top.
Chart 6 shows the performance of all 128 cryptocurrencies, divided into coins (brown) and tokens (green). Two statements can be made about this.
- As of July 2021, The top 10–20 mainly contain coins.
- Below this, a mixed picture emerges. With their increased appearance since 2017, many tokens can also be found in the top 100–200.
Chart 7 shows the performance of 17 cryptocurrencies that according to Coinmarketcap have the feature ‘smart contract’ (dark green). As the chart shows, the majority of crypto projects with this feature can be found in the top 100. If you look closely, you can see that some of these cryptocurrencies simultaneously rose in the rankings in the period from late 2019 to late 2020 and have fallen back somewhat since then.
Note: It is possible that among the cryptocurrencies examined here, there are more than those indicated by Coinmarketcap that have smart contract functionality. This means that the picture here might be incomplete.
Chart 8 shows the performance of 27 cryptocurrencies that according to Coinmarketcap have the feature ‘medium of exchange’ (dark red). As the chart shows, the majority of crypto projects with this feature can be found in the top 100. Based on the data available here, it appears that these types of cryptocurrencies had their best time on average in the period from around 2015 to 2018. Since 2019, many have been falling in the ranking.
Note: I believe that some of the older coins from before 2015 might also have this feature and that this wasn’t tracked by Coinmarketcap.
Chart 9 shows the performance of 27 cryptocurrencies that according to Coinmarketcap have the feature ‘DeFi’ (dark blue). These are not found at the very top, but are distributed across the entire spectrum.
Chart 10 shows the performance of 44 cryptocurrencies that according to Coinmarketcap are features in the portfolios of large institutional investors (dark purple). With few exceptions, they are all in the top 100. Since 2017, the number of cryptocurrencies that are part of portfolios has been steadily increasing.
Interpretation of Results & Key Takeaways
- As the analysis shows, most of the top 50 cryptocurrencies from the 2013 bull run did not represent a good long-term investment, as since then most of them either disappeared or lost massively in rankings.
- This contrasts with the top 50 of the 2017 bull market, most of which are still to be found in the top 100.
- In general, those cryptocurrencies that make it into the top 10 represent a good and safe investment in the long-term, as once established they usually remain in the top ranks.
- Use cases do not allow any reliable conclusions to be drawn about the long-term performance of cryptocurrencies. However, it seems that the performance of coins and tokens with certain use cases changes over time. This could have to do with various factors such as novelty value, and technological developments.
- Naturally, those cryptocurrencies that are part of the investment portfolios of large investors find themselves at the top of the list. Since the data set does not show when the various investors included individual currencies in their portfolios, no further statements can be made on this.
In summary, the cryptocurrencies that hold their value best in relation to the others for a long time, are to be found in the top 10. Of course, the price and market cap of the individual cryptocurrencies are subject to the usual fluctuations.
Disclaimer: This article is only for informational and educational purposes. It should not be taken as financial advice.
