The cryptocurrency market is flooded with tokens trading for pennies or even fractions of a cent, luring investors with the illusion of massive upside. However, a fundamental concept — digital scarcity — is often overlooked. The sheer number of circulating tokens can distort perceived value. A token with trillions of coins will naturally have a low unit price, but its true market value per coin may be far higher when adjusted for supply.
Understanding Bitcoin Price Equivalence
To address this cognitive bias, the website Bitcoin Price Equivalence (BPE) was launched. It recalculates the price of any cryptocurrency as if its circulating supply were identical to Bitcoin’s 21 million cap. For instance, Ripple (XRP) currently has a circulating supply of roughly 40 billion coins, trading at around $2.50. But if XRP had only 21 million coins, its equivalent price would be approximately $15,000. Similarly, Stellar (XLM) would be worth about $4,000 per coin (currently $0.66), while Dentacoin (DCN) — with 8 trillion tokens — would be valued at $633 per coin.
Bitcoin columnist Eric Wall explained the concept in his weekly trading feature: “Of course, the unit price of a coin is a totally senseless basis for making investment choices on. Any cryptocurrency – even Bitcoin – could have been a sub-cent item, if Satoshi chose the final cap to be 21 quadrillion instead of 21 million.” The BPE tool operationalizes this logic, forcing investors to question: “Would I pay this price if the coin had Bitcoin’s scarcity?”
Practical Applications for Investors
The BPE metric is not just an academic exercise — it highlights both overvalued garbage and undervalued gems. Ethereum (ETH), with a circulating supply of around 120 million coins, has a BPE of roughly $6,700. While Ethereum faces scaling and centralization challenges, its actual usage and developer activity make a $6,700 price less far-fetched than a $15,000 XRP or $600 Kin (which has a BPE of $600).
Dentacoin’s example is particularly striking: despite a market cap of $1.8 billion at its peak, the BPE of $633 reveals that early buyers were effectively paying prices far beyond what the token’s scarcity would warrant. Conversely, coins with large supplies but strong fundamentals may still offer room for growth if their usage justifies a higher market cap relative to supply.
Limitations and Cautions
BPE is a useful mental framework, but it is not a flawless valuation method. It ignores differences in utility, network effects, tokenomics, and real-world adoption. A coin with 1 trillion supply might have a very low BPE, but if its technology is revolutionary and widely adopted, the absolute price could still rise. Nevertheless, BPE serves as an essential check against the “penny stock” trap. As the website states: “Normalising price by removing unit bias, coins that look ‘cheap’ are probably not as cheap as you think.”
For new entrants in crypto, understanding scarcity is critical. Bitcoin’s $60,000+ price tag is partly a reflection of its limited supply. Before buying any altcoin, calculate its Bitcoin Price Equivalence — and ask yourself whether you would still buy it at that price. The answer might surprise you.