How much money did I lose by not investing in Bitcoin?

Hi, this is Eddie. Most of the time, you can find me on the other side of suport@datawrapper.de or Datawrapper’s Twitter, Facebook, and LinkedIn account. This week, I will dive into a phenomenon that has left many investors clueless: Bitcoin.

Like most people out there, I was late to the Bitcoin party. When I first heard about it in 2014, I didn’t understand what was going, and it all sounded like a foreign language to me. I was unfamiliar with terms like mining, blockchain, or encryption, so I didn’t overthink it and continued with my life.

That was until 2017 when Bitcoin went from $830 to $19,300, and Ethereum —the second-largest cryptocurrency in terms of market capitalization— started the same year at less than $10 and closed it at $715. Back then, news from people that became millionaires thanks to crypto made headlines everywhere. But also from those that wasted fortunes over a pizza or a sushi dinner with friends.

The same thing happened again in 2021: Bitcoin made it to the front page when Thursday last week, it topped $40,000 for the first time in its history. This record came just some days after the cryptocurrency hit another all-time high of $34,800 and celebrated its 12th anniversary on January 3rd.

While some experts set exorbitant targets for Bitcoin for 2021 of between $220,000 and $300,000, others call for caution. “When any asset climbs in price this fast for an extended period of time I become cautious, and I’d urge anyone trading BTC to not get caught up in the euphoria,” explains Nicholas Pelecanos, head of trading at the cryptocurrency firm NEM.

The model Stock-to-Flow provides a middle point between these extremes. It’s devised by a person known as Plan B and has so far proved to be surprisingly accurate. According to this model, Bitcoin could come closer to $90,000 by the end of 2021. Plan B built his model on an exciting premise: That Bitcoin can be compared with commodities such as gold or silver, which are known for retaining value over time due to their scarcity. Bitcoin is known to be the first digital object which is scarce, since it’s limited to 21 million, with around 18.5 million already mined.

While it’s hard to truly anticipate what will happen with Bitcoin in the short and long term, let’s see what could have happened if I (or you) had joined the trend a year ago:

If I had put 100 USD in Bitcoin at the beginning of 2020, I could have had 300 USD more now. But the real money-maker of cryptocurrencies last year was Chainlink, which performed exceptionally well. If I had bought 100 USD of that one and sold it in August, I could have made almost a thousand. If I had waited until the end of the year, the benefit would still be close to 600 USD.

The American and Chinese electric vehicle companies Tesla and Nio turned out to be an even better bet. Those companies would have given me a benefit of 700 USD and 1,200 USD respectively by the end of the year. Looking back at it now, I do regret not investing some hundreds at the beginning of 2020.

Getting the data

The numbers for both line charts come from Yahoo Finance, a platform that offers historical financial data in CSV form. The process to download it was effortless, and it only took me a couple of minutes to write and run this script using the language Bash:

#!/bin/bash

# Coin pairs
CoinsVal="TSLA ETSY NVDA AMZN NFLX NIO NKE BABA SNE UBER BTC-USD ETH-USD XRP-USD LTC-USD BCH-USD ADA-USD DOT-USD LINK-USD XLM-USD USDT-USD"

# Download each pair via Yahoo Finance
for val in $CoinsVal; do
echo "Downlading $val"
curl -o "$val.csv" "https://query1.finance.yahoo.com/v7/finance/download/$val?period1=1577836800&period2=1609459200&interval=1d&events=history&includeAdjustedClose=false"
done

The variable CoinsVal contains a list of the stocks and cryptocurrencies I wanted to get data from, while $val operates as a placeholder for those names. The query in quotation marks includes period1, which is the first date I want to get data from (01/01/2020), and period2, the last day (31/12/2020). You can run this script directly in the terminal. If you would like to use this script and struggle with this process, just let me know, and I’ll be happy to help!

References

Here are a few articles and tutorials that helped me create this Weekly Chart:

  1. Modeling Bitcoin Value with Scarcity — a model that predicts how Bitcoin could grow from now until 2028.
  2. Learn X in Y minutes, where x = bash — an excellent resource if you want to learn more about Bash, the language I used for the script above.
  3. How to create text annotations — this article from our Academy helped me to get more familiar with our recently launched annotations (which I love!).
  4. How to pick more beautiful colors for your data visualizations — choosing the right colors is my constant struggle. That’s why I always refer to this article by my colleague Lisa, which makes the process way more manageable. I also use often Adobe Color and Coolors.co to check some combinations.
  5. Finally, if you are also asking yourself if it’s too late to invest in Bitcoin, here are some articles that you could find interesting: Is It Too Late to Buy Bitcoin? and Bitcoin: why the price has exploded – and where it goes from here.

And that’s all from me this week! If you have any comments or questions about today’s Weekly Chart, you are always welcome to drop me an email at edurne@datawrapper.de or write me a message on Twitter (@EdurneMG). Next week it will be the turn of our developer Simon Jockers, and I’m excited to see what he makes!

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