How Is the “Beta” of a Crypto Asset Estimated for Use in a Modified CAPM?

The beta of a crypto asset is estimated by regressing the asset's historical returns against the returns of a chosen market proxy, such as the total crypto market index (e.g. a basket of the top 10 tokens) or Bitcoin. Since the correlation between individual tokens and the broader market is highly volatile, the resulting beta is often unstable and unreliable.

Analysts may use an "adjusted beta" or simply rely on a high, subjective risk premium to account for the unquantifiable systemic risk.