How did this sub's favourite (smaller) alts do since 2020? An analysis of the rise from the 2020 COVID low and the fall from the 2021 high

The story of this sub's favourites (smaller) alts

One of the key characteristics of this subreddit is the love for some of the relatively "small" alts in this space, because it is believed here that those alts are severely undervalued and will moon hard to get to their "true value". ALGO and ATOM are prime examples now. These alts then proceed to get a lot of mentions in this subreddit in the form of newsposts and comments in the daily with a lot of upvotes. But how well do the sub's picks really do?

I will analyze the smaller alts that in my view qualify as the sub's favorites of the 2020-2021 part of the bullrun, namely : CRO, LUNA, ALGO, LTO, VET, ONE, NANO, LRC, XTZ, and CKB. Note that this list is arbitrary and that some of these did get big at all time high (ATH).

​

How did the sub favourites fare?

I will analyze them in terms of % gains from the 2020 COVID lows for the sake of comparability [because some did not exist during the 2018 bear low] and max and current % drawdown from ATH.

​

• From the perspective of the COVID lows, each coin mooned. An average of +10.200% is insane. Some pumped more than others.
• After the ATH in 2021, each coin also dumped a lot again, with an average of 93% at the June low. These coins are still up relative to the COVID lows though, except for Luna (F in chat).

​

How did the alts fare relative to established large projects?

A key question is, was the risk of buying these smaller alts worth it relative to the more safe big projects? I will focus on the current top 3.

• The average gains of the top 3 are very high with +6000%. Note that including BNB is questionable, as it was the #9 market cap back then, while XRP was #3 and did not increase as much (1600%) due to SEC lawsuit. So with XRP the average would be lower but still substantial.
• This drawdown of the top 3 is large but right now they are, on average, "only" down 64%. BNB is truly the star performer and BNB/BTC is even at all time high.

​

Overall conclusion

• The smaller alts that this sub loves pumped more since the COVID low than the big caps with, on average, 10200% vs. 6000%.
• The smaller alts also fell a lot harder since ATH. For perspective, on average, investing $100 in the small alts at ATH would now give you $8, while investing in the top 3 would give you $36. That is a 4.5x difference. Most of the smaller alts are still very dead right now. ALGO and XTZ are down the least in percentage terms, but also did not pump nearly as much as the other sub favorites.

​

What might this data suggest?

• Based on this data, if the idea is to hodl rather than actively trade, the risk-reward ratio is more in favor of the bigger caps. A bit of an extra pump is not worth the risk. Some of the sub's favorites have essentially died, like Luna.
• This is even more true given that we likely are not that early buying the smaller caps, because during the COVID lows, quite a few of the smaller projects were rather unknown (here). Most people here probably found out about these projects via this sub during the 2020-2021 run. It is a bit of a mystery how coins become a sub favorite. Probably a combination of marketing, a hype narrative, a promising use-case, and (very) positive price action.
• Moreover, a comparison of the charts really shows how these smaller alts do not spend a lot of time near the highs - they have much more of a blowoff top pattern than the bigger alts, which spend more time near the top.

So...

• Identifying the bigger safe caps with upside might be a better strategy for most of us if we consider the COVID situation similar to the bear now. It keeps our decisions simple and reduces risk while there should still be a very significant upside. If we buy smaller alts and particularly sub favorites, it is good to accumulate (very) low and to not forget to take profits because they can drop hard.
• In my view, this data provides some arguments for the good old accumulate BTC + ETH and have some smaller alts on the side.

My goal here was to inform and educate. I hope this goal was achieved.