#cryptoassetstudy

Within the cryptoasset space, valuation has been a hotly debated topic for many years. During 2016 and particularly 2017 it was a relatively simple discussion, which in the parlance of the space was “when moon”, reflecting the market’s upward trajectory and an ever-hopeful voice that 10x or even 100x could be possible in the span of a month (which it sometimes was, especially in December ‘17/January ‘18). This optimism was not surprising in a year where Bitcoin began at ̃$1,000 and saw an end of year peak of ̃$20,000. Nonetheless, there were many grappling with how to look more deeply at the fundamentals of valuation of a cryptoasset and/or its related project and how those two could be considered to intersect.

Much of 2018 has been a rather different year and a question we often hear now is "when tulips" or more precisely "what tulips" and a much stronger focus on valuation. While we cannot answer the "when," we can provide a range of options as to the "what," and the lens that we provide certainly can paint a picture of certain areas of cryptoassets as having relatively strong fundamentals; while others appear heavily skewed, driven by speculation and not necessarily justifiable valuations. We would further note that these aspects will continue to have real world consequences beyond market price, including standards around disclosure practices and GAAP reporting which do not currently have a well-fitting framework. These are issues that we will continue to explore in later notes.