How Is the Beta Coefficient Adapted for Crypto Assets in CAPM?

The Beta coefficient, which measures an asset's volatility relative to the overall market, is challenging to calculate for crypto. A proxy for the "market" is often used, such as the total crypto market cap or a broad index like the S&P 500, though the latter is less common.

The resulting crypto Beta is often very high, reflecting the asset class's systemic risk. Due to the nascent nature of the market, many analysts use an estimated or historical Beta from similar tokens, or simply rely on a high-risk premium instead of a formal CAPM.