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Abstract:Cryptocurrency prices move both up and down, but one set of companies always profits: crypto exchanges. These trading platforms have also attracted the attention of big pocket investors and venture capitals and are receiving astronomical sums from them at insane valuations.
FTX recently snatched the valuation of $32 billion.
These global exchanges are growing at a tremendous pace.
FTX.com, which became one of the leading crypto trading venues in terms of volume, recently hit the valuation of $32 billion, jumping from $25 billion in just three months. The US subsidiary of this global exchange touched the $8 billion valuation mark separate last month.
While FTX and its investors were vocal about the exchanges valuation, Binance, which leads the pack of global crypto exchanges, never disclosed its value. A former Binance executive, however, said that the exchange could be worth $300 billion.
So what is driving this astronomical valuation of cryptocurrency exchanges? And is it even fair to put such a high valuation on these young exchanges?
“When it comes to the valuation, we should in the first place think in terms of the fundamentals which are pertinent to any commercial vehicle, such as its ability to generate cash flow, its long-term prospects, and the return at which the company can produce value for its investors,” Sergey Zhdanov, COO of crypto exchange EXMO, explained to Finance Magnates.
However, these metrics alone cannot be predicted with some level of certainty are not sufficient to evaluate the fair valuation of crypto exchanges as so many other factors also need to be considered.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
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