Are Cryptocurrency Exchanges Overvalued？

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.