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An answer to crypto’s unanswered question: At what price?

A discounted cash flow framework can be applied to crypto assets to arrive at a range of valuations to guide investors

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    • A discounted cash flow method can be used to ascertain a range of prices at which a reasonable, risk-adjusted rate of return can be expected for a given time horizon for crypto assets.
    • A discounted cash flow method can be used to ascertain a range of prices at which a reasonable, risk-adjusted rate of return can be expected for a given time horizon for crypto assets. ILLUSTRATION: PIXABAY

    DeeperDive is a beta AI feature. Refer to full articles for the facts.

    Mark Schumacher

    Published Tue, Jan 23, 2024 · 08:10 PM

    A FEW foundational microeconomic assumptions and a discounted cash flow (DCF) framework can help inform crypto buy and sell decisions.

    An article by Franklin Parker, Crypto’s Unanswered Question: At What Price?, published last August, highlights a conversation I often have with other CFA charterholders, investors and clients. These discussions have led to both valuable thought exercises and rousing debates.

    I am not a crypto expert and certainly not a crypto “bro”. I have no strong opinion on whether crypto assets are undervalued or overvalued, whether they are the future of money and commerce, or a fad that we will all look back on in amusement. Nevertheless, I believe crypto investors can employ a logical valuation framework by which they can make reasonable and informed investment decisions.

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