What Are the Limitations of Using the S&P 500 as a Market Proxy for Crypto Beta?

Using the S&P 500 as a market proxy for crypto Beta is limited because crypto assets, as a new asset class, often exhibit low correlation with traditional equity markets. The S&P 500 does not accurately capture the systemic risks unique to the crypto market, such as regulatory uncertainty or protocol-specific vulnerabilities.

This results in a Beta that may not truly reflect the asset's sensitivity to the overall crypto market, leading to an inaccurate risk-adjusted discount rate.