What Is the Appropriate Discount Rate for a Crypto DCF Model?

The discount rate for a crypto DCF model must be significantly higher than traditional finance rates due to extreme volatility and regulatory uncertainty. It should reflect the project-specific risk, the general crypto market risk, and the time value of money.

Often, a high-risk-adjusted rate, sometimes exceeding 20% or even 30%, is used. Some analysts adapt the Capital Asset Pricing Model (CAPM) using a proxy for beta, while others use the Weighted Average Cost of Capital (WACC) with high-cost-of-equity estimates.