21Shares Releases Seventh State of Crypto Report

The State of Crypto Report provides an in-depth look at the crypto industry over the past few months, as well as insights into crypto valuation frameworks.

ZURICH/NEW YORK, October 5, 2022 – 21Shares AG (“21Shares”), the world’s largest issuer of cryptocurrency exchange traded products (ETPs) and a subsidiary of 21.co, today released the seventh edition of its State of Crypto Report – Our Insights into Valuation Frameworks, the Case for Cryptoassets.

The report provides an in-depth overview of the state of the cryptoasset industry over the last few months. In addition, it provides an update on the company’s original valuation methodology report first published in September 2020 – combining and building upon previous efforts to develop a fundamental framework for determining cryptoasset valuations.

Currently, there is no industry-wide consensus on how to value cryptocurrencies. However, given the rapid adoption of the crypto industry – which has grown 194% over the past two years from $390 billion to over $1.1 trillion in market value – there is a clear need for a framework around the asset class. The goal of this report is to propose valuation methodologies that reconcile the different approaches investors have taken in recent years.

Key topics explored in the report include:

• The two approaches to valuing asset classes including crypto: intrinsic valuation and relative valuation. The distinctions between each framework are below:
  • Intrinsic valuation links the value of an asset to its capacity to generate cash.
  • Alternatively, relative valuation (also called “pricing”) estimates how much should be paid for an asset based upon what others are paying for comparable assets.
• How investors can apply relative valuation approaches. This can be done in two ways – via ”multiples” and market sizing:
  • Multiples provide a standardized price estimate and help determine whether a given asset is undervalued or overvalued relative to its peers.
  • Market sizing…