“Bitcoins vs Sh*tcoins”: An Apples-to-Apples comparison


Are Altcoins really that cheap?

This is a quick and simple exercise expanding on a table first shown by @boxmining.  Given the sudden influx of new money that has been chasing “cheap Altcoins”, to a new investor Bitcoin’s ~$15,000 price tag may appear unaffordable compared to an Altcoin priced at ~$1. So the aim is to remove the “unit bias” of each Altcoin by repricing them using the same current Total Coin Supply as Bitcoin.

Methodology
Top 50 coins by market cap are compared. All data is taken from Coinmarketcap.com and current Total Coin Supply is used. (For example, in Ripple’s (XRP) case its Total Coin Supply will be 99.993 billion including any coins held in escrow).  All Altcoin market caps are then divided Bitcoins current total coin supply of ~16,796,387 (as of when this was article was written), and then re-ranked by price to give a fairer and direct “apples-to-apples” view of each Altcoin price compared to Bitcoin’s price.

(1) Normal Market Cap Ranking for Top 50 coins:
We see the usual suspects in the top 10~15 or so coins but the picture becomes less clear the further we go down the list.  Is Verge (XVG) priced at $0.16 really “cheap” despite being ranked #22 by market cap? Is Veritaseum (VERI) ranked at down at #46 market cap still considered cheap at $424 ?

top50 coins_mktcap

(2) Re-Ranked Table according using SAME Total Bitcoin Coin supply:

This new table re-ranks all coins assuming they have the same current Total Coin Supply as Bitcoin. i.e ‘Altcoin Market Cap / BTC current Total Coin Supply’ gives the following:

ReRanked Top 50 by Price

Here you have a direct comparison by price with the new rank in red vs the normal rank in the previous table in blue.  I have also tried to have a more systematic way of  identifying “undervalued” or “overvalued” coins in the sense of where they are positioned in the new rank vs their old ranking by using a simple “rank ratio”.  In the last column, coins highlighted in orange are considered to be overvalued if ratio <0.5 and highlighted in green if considered to be undervalued if ratio greater than >1.5.

What this does is try to highlighted big skews in rankings.  For example, Veritaseum (VERI) was ranked #46 by market cap but re-ranked at a much higher #6 when its coin supply was made equivalent to Bitcoin’s, with its price jumping from $424 to $2528!  So if VERI seemed expensive compared to other Altcoins before, it is comparably more “expensive” when quantified by the new ranking – even more expensive on an absolute “$ per coin” terms than a top 10 market cap ranked crypto like Litecoin!

Similar “overvalued” arguments can be made for Dentacoin (a seemlingly “cheap” $0.001 coin ranked at #41 by market cap but re-ranked at #19 with a equivalency price of $330!  Definitely not looking as “cheap” at first glance.

The reverse argument can be made for “undervalued” coins. Eg. ZCash (ZEC) is ranked at #25 by market cap at a price of $674 but is re-ranked at a much lower #40 – perhaps suggesting that there could be further upside to its re-ranked price of $119.

Caveats!
Note that this is just a snapshot of price and market cap which is constantly changing and the calculations also exclude potential mining contributions which may expand any coins current Total Coin Supply at a given time. Also, the valuation methodology is purely based on ranking with cut-off ratios chosen to best filter outliers for further scrutiny, and of course the rankings do not take into account any of a particular coins fundamentals. Well, as they say: “It’s all in the price!”

Happy Trading!

AJ

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

Up ↑

%d bloggers like this: