$1000 portfolio in crypto-currency

Crypto markets have lately been in news for good and bad reasons. Launch of #Bitcoin ETFs to Charlie Lee selling his stake in Litecoin. There were different interpretation of launching of ETFs. Some thought that it would reduce the volatility in the spot market while some thought it is just another method for market players to speculate. We do not know how it will end up. Give the futures market sometime. It is too early to comment on its impact on spot market.

#Volatility seems to be inherent characteristics of crypto market. It does make investment difficult for smaller investors. I tried to look at 3 weeks investment return for the month of December. If you invested $1000 on 1st of December then how would your returns look like. The graph below shows all the investment starting from the same point on the bottom left of the graph, which means that you have invested $1000 in one of the currency at start of the month. Different colour lines represent different currency in crypto markets. I picked up the popular ones #Bitcoin, #Litecoin, #Dash, #Ethereum, #Ripple and #BitCash.

From the graph above one crypto which stands out is Litecoin. Launch of ETF definitely impacted positively to Bitcoin and had an contagion impact on other coins. If you had invested $1000 on 1st December then in three weeks you would have made it to $1500. All other coins follow similar pattern, Litecoin being an outlier. Definitely the Charlie Lee stake sell was taken positively by the market. The Litecoin investment return would have been $3160 if $1000 were invested at the start of the month. Litecoin also had highest variation. Ethereum seems to be least volatile after bitcoin with 75 percent returns. Ripple and dash have doubled the investment in three weeks.

Volatility is the inherent characteristics of crypto given the limited supply of the coin. On the other side, big market players jumping in and out will swing the market in either direction. Volatility is going no where in the crypto market. It will only depend how one can make gainful trades from such systematic volatility.