The CFA Institute, the global association for investment professionals, has published a guide to valuing cryptoassets.
According to the CFA, valuations have become a critical topic regarding the growing cryptoassets market.
The upheaval and price volatility experienced in recent years have made the analysis of “valuation drivers” imperative for anyone considering investment in the digital asset class, states the CFA.
Its guide focuses on three areas of concern – the wide variation in valuations that currently exist; the lack of testing or rigour in current valuation models, and the lack of historical data.
“This guide provides a framework for investment professionals to undertake a thorough analysis of the valuation drivers of cryptoassets, including fundamental characteristics such as cash flows, growth rates, and tokenomics,” said Rhodri Preece, senior head of research at the CFA Institute.
“Current valuation models have their limitations, and the lack of historical data makes statistically robust cryptoasset valuations challenging. No single valuation model or metric should be used in isolation.”