Valuing Digital Assets With TradFi Tools: 3 Methods

SummaryDigital assets are a new and distinct asset class that, despite considerable volatility, is rapidly maturing. To analyse digital assets, we apply the lens of traditional finance (“TradFi”).By combining this framework - informed by decades of experience in equities, bonds, hedge funds, and capital markets - with a deep understanding of token technologies and structures, we hope to identify attractive opportunities.Taking a look at three approaches to crypto analysis: sector classification, valuation methodologies, and risk management techniques.IntroductionDigital assets form a new and distinct asset class that, despite considerable volatility, is rapidly maturing. Bitcoin (BTC-USD), the first and largest cryptoasset, laid the foundation for enormous innovation across decentralized finance (DeFi), the metaverse, and various other crypto sectors.To analyze this nascent asset class, we apply the lens of traditional finance, or what some in the crypto space call “TradFi.” By combining this framework - informed by decades of experience in equities, bonds, hedge funds, and capital markets - with a deep understanding of token technologies and structures, we hope to identify attractive opportunities.Here we’ll walk through three approaches to crypto analysis: sector classification, valuation methodologies, and risk management techniques.1. Organize Crypto into SectorsAccording to CoinMarketCap, there are 9,749 liquid tokens as ...