Short-Term Dynamics

The discounted cash-flow (DCF) approach describes a fair value state at each future time point. It is not a dynamic model, i.e. it does not account for short-term price fluctuations. The NXTT token, as a traded asset, will be subject to market influences. Although DCF is expected to assess the long-term equilibrium, the short-scale behavior will deviate from mean values.

Here we present a dynamic approach that gives insight into what can happen in the short run. The short-term model takes the first-year NXTT Economics model (mid or realistic scenario) as input and adds exchange market dynamics to it using a Monte-Carlo simulation.

We assume a standard lognormal stochastic differential equation in the form of:

The drift term and volatilities are calibrated to historic data. This technique allows us to go beyond static modeling and have an idea of what can happen in the short term.

The simulation results underline the observation that crypto is a risky asset class for the time being. Market participants are advised to precede any investment decision with prudent analysis, to implement conscious trading strategies and to observe portfolio management best practices.

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