What Is Sensitivity Analysis and Why Is It Crucial for Crypto Forecasts?

Sensitivity analysis is a modeling technique that determines how different values of an independent variable (e.g. discount rate, growth rate, transaction volume) affect a particular dependent variable (the token's intrinsic value). It is crucial for crypto because of the high uncertainty in forecasting.

By creating a range of scenarios (best-case, base-case, worst-case), investors can understand the margin of safety and the key drivers of the valuation, rather than relying on a single, potentially flawed point estimate.