August 18, 2022

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3 Underrated Altcoins to Buy As Polkadot Surges 158%: Crypto Analyst

  • Bitcoin and ethereum have each had an outstanding 2021 but may be running out of upside.
  • Mehdi Farooq, a senior analyst at Token Metrics, made the case for polkadot to go on a big run.
  • The crypto bull shared why he still likes bitcoin and ethereum but is closely eyeing three altcoins.

Mehdi Farooq considers himself to be a bitcoin bull, even though some of his peers might not.

The senior investment analyst at Token Metrics admits his price target for the world’s biggest cryptocurrency — $70,000 within the next 18 months, which implies 29% upside from current levels — is conservative, at least compared to some of his contemporaries calling for a rally to $120,000.

There are several catalysts that could send the crypto skyward, Farooq told Insider, but the most powerful is inflation. Pricing pressures will persist longer than many fund managers originally believed, Farooq said, which should make bitcoin more attractive, given that its supply is capped at 21 million units. Some analysts have likened the coin to “digital gold” and consider it to be an inflation hedge since its quantity can’t increase, unlike the dollar.

But the biggest opportunities in the cryptocurrency world are found elsewhere, Farooq said.

“I’m positive on bitcoin in both the short term as well as medium term, but long term, in terms of potential, I still feel like a lot of innovation is happening on the altcoin side,” Farooq said.

Farooq believes that altcoins, or non-bitcoin cryptocurrencies, will “start to pick up” as bitcoin peaks and investors shift their focus to burgeoning ideas, like Web 3.0 and the metaverse, that are developing on other blockchains. Naturally, some of these tokens inevitably get “overextended,” the analyst said, adding that signs of froth shouldn’t distract from the excitement in the space.

Ethereum has a bright future, but rising competition will cap its near-term upside

Ether, the second-biggest cryptocurrency in the world and the native token of the ethereum blockchain, has long been the default alternative to bitcoin.

Farooq is a big fan of the token in the long term, and predicted that its market capitalization, currently sitting at $500 billion, will surpass that of bitcoin ($1.07 trillion) in the next three to four years in an event known as “the flippening.” However, in the near-term Farooq believes that ether will spend the next year and a half “range-bound” between $3,500 and $4,800, as it has for the past few months.

Ironically, heightened interest in ethereum’s blockchain created problems for its network, which suffered from slow transactions and unpredictable fees.

In response, a slew of competitors have sprouted up in hopes of becoming “ethereum killers:” cardano (ADA), solana (SOL), terra (LUNA), avalanche (AVAX), and polkadot (DOT). These tokens gained fans because they promise more functionality and scalability, Farooq said. 

Though the long-term picture for ethereum is intact, Farooq said there could be “near-term pressure” as the token’s top competitors gain momentum, hence his tempered price target.

Polkadot stands out among ‘ethereum killers’

Of the five aforementioned altcoins gunning for ethereum and hoping to steal market share, Farooq has a favorite: polkadot — a protocol designed to connect different blockchains.

Ethereum and its so-called “pseudo-competitor” share a cofounder (Gavin Wood), though their missions are notably different: The former is designed to power decentralized apps, while the latter has set out to be “a Web where our identity and our data is our own — safely secured from any central authority.” 

Polkadot will succeed because it’s not battling against ethereum and its fellow undersized competitors head-on in a quest for the most speed or scalability, Farooq said. That fight could turn into a losing one as ethereum becomes more efficient and evolves into ethereum 2.0.

“What polkadot is doing, it’s tackling a similar issue but with a very unique framework,” Farooq said. “Instead of making a layer 1, they’re making a layer 0 that other blockchains can build on. And since part of the blockchains are using the same security setup, they can cross communicate with each other very efficiently.”

This will create an “internet of blockchains,” Farooq said, adding that this currently isn’t possible with ethereum. Polkadot can also solve disputes on its blockchain more easily than ethereum can because of what Farooq called “on-chain governance.”

“You need protocols, whether it’s DeFi, whether it’s metaverse, whether it’s gaming, whether it’s DAO, you need a layer 0 that allows chains to communicate with each other,” Farooq said.

Polkadot will rise to $93 from $36 — a 158% surge — in the next 18 months on the back of a supply squeeze, Farooq predicted, citing analysis from Token Metrics.

“If you want to truly hedge ethereum, your bet against ethereum — if ethereum might fail, the best player to give you that hedge, in my opinion, is polkadot,” Farooq said.

Below are three other altcoins that Farooq favors, along with each crypto’s symbol, market capitalization, and Farooq’s thesis for each. All are connected to polkadot in some way, the Token Metrics analyst said.

https://www.businessinsider.com/altcoins-to-buy-crypto-polkadot-bitcoin-ethereum-dot-btc-eth-2021-11