My Crypto Experiment For 2022 – A Weighted Portfolio of Coins

With 2021 more and more in the rearview, I decided to create my own mini crypto-ETF for 2022 and track its progress throughout the year with monthly updates. I guess you could say that this is more of an experiment than a strategy, and you would be right!

I have invested in crypto here and there during the last few years but never carefully tracked how it moved and the overall return on my money. My goal for this experiment was to have an easily reproducible template that others can follow, or even myself. Below are the parameters that I followed regarding the construction of this ETF:

• Total investment amount: $150
• Distribute money unevenly across the top 20 cryptos by marketcap (excluding stablecoins and XRP)
• BTC and ETH should have at least a 20% combined allocation
• Make the purchase around the beinning of the year

I will walk you through a few choices and decisions I had to make about selecting the allocation percentages that I used. Read until the end to see the final portfolio and my plans for it.

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Before we continue, I must warn you that I am not a financial advisor of any kind and this is not financial advice.

I just wanted to share what I am doing for next year regarding the world of crypto. Also, I have sprinkled referral links to different sites, such as Coinbase, BinanceUS, Kraken, etc. If you sign up using those links there is a chance I will a bonus or compensation, but at no cost to you.

With that out of the way…

A Little Explanation About The Parameters I Chose

I am investing a small amount of money to see how this investment performs over the course of a year. After the huge market rally of 2021, I did not want to put down a lot of money near the top.

Typically, I would concentrate on Bitcoin and Ethereum mostly since I like to avoid clutter, but I also want to take advantage of the large movements that small cryptos tend to have. As a result, I wanted to get exposure to the top 20 cryptocurrencies by market capitalization, although with different percentages.

My plan is to allocate roughly $100 to the top 10 and the remaining $50 to the next top 10 coins. That way I can focus on the more established ones while also benefiting from the up-and-coming cryptos.

However, early on I decided to put at least $15 into BTC and another $15 into ETH. Additionally, I made the decision to skip XRP because everything about it is uncertain right now. It is also hard to find an exchange that supports it, at least in the US.

If I had created a weighted portfolio, BTC and ETH alone would have accounted for about 76% of the investment. That would not have worked for me because I wanted exposure to the market outside these giants.

How I Came Up With a List of Contenders

My selection criterion was quite simple: invest in the top 20 coins by market cap. Therefore, coinmarketcap.com was a great tool for this task. I went to the site, which already ranks every crypto by marketcap and manually ignored all stablecoins. There might be a filter to only show non-stable coins automatically but I could not find it.

I thought this was going to be a straightforward process, but I was somewhat wrong. With prices moving fast for the past few days, positions kept shuffling, and sometimes coins dropped out of the top 20 list and new ones entered the list.

My original list looked like this (on December 21st):

There are 21 cryptos showcased above. I gave myself some breathing room and flexibility in choosing alternatives. For instance, I decided to also exclude Tron (TRX) simply because it is not available on Coinbase Pro.

I found out that I could purchase it from Kraken. However, there is a minimum purchase of $10, which is less than my intended allocation. Therefore, it did not make much sense to do all that extra work. If I were to invest a greater amount then I would definitely go the extra mile.

Another issue I encountered was that LUNA is not available directly on Coinbase Pro. Nonetheless, there is a way to get price exposure to it by buying Wrapped Luna (WLUNA), so that’s what I went with.

I spent two days deciding if it was the right time to enter the market, and in the meantime a lot of the coins I was eyeing increased substantially in price. So, remember that usually timing the market is a losing proposition. All the price movement meant that some new coins showed at to the top 20 and in the end, I swapped MANA for ATOM and made the following final list: