Valuation bands are predefined ranges of prices or metrics used to assess the fair value of an asset. In digital asset analysis, these bands help determine if a cryptocurrency is overvalued, undervalued, or fairly priced relative to historical data, fundamental metrics, or comparative assets. They provide a framework for investors to make informed decisions by identifying potential entry and exit points. Various technical and fundamental indicators can be used to construct these bands.
Context
Crypto market analysts frequently refer to valuation bands in their reports to provide context for current price movements and future predictions. Debates often involve which metrics are most appropriate for digital asset valuation, given their novel characteristics. The application of valuation bands helps bring a more structured analytical approach to a highly speculative market.
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