3 Altcoins to Buy As Bitcoin, Ethereum Struggle: Token Metrics – Business Insider

Bitcoin and ethereum may be victims of their own success. The two largest cryptocurrencies have, in the eyes of many, legitimized digital assets over the past half decade — but by doing so they have laid the groundwork for a wave of new competitors that have built superior networks.
Contrary to what bitcoin maxis will argue, “there is definitely better tech out there,” said Mehdi Farooq, the director of research at Token Metrics, in a recent interview with Insider. 
But while Farooq doesn’t see either bitcoin or ethereum logging big gains anytime soon, he also said that he’s not bearish on them because both have achieved scale, which should allow them to survive for the long term.
“Crypto is all about network effects,” Farooq told Insider. “So you don’t necessarily have to have a superior technology to achieve that. That’s why there’s a lot of emphasis on marketing.”
Large and small cryptos have, for the most part, had a dreadful year. Concerns about runaway inflation — and the Federal Reserve’s decision to quickly raise interest rates in response to it — have gripped the crypto market and are worth watching closely, according to Farooq.
“The monetary policy and the fiscal policy in the US was very loose,” Farooq said. “And now you’re going to see the Fed aggressively hike rates. And this is something that markets do not appreciate.”
Unlike many of his contemporaries who predicted that bitcoin would top $100,000 in 2021, Farooq didn’t get carried away with his price target for the token. He told Insider in late November that he thought bitcoin would only reach $70,000 over the next 18 months — a level it had nearly hit just two weeks earlier. It has since fallen about 30% from the mid-$50,000s to $39,800 today.
Five months later, Farooq’s view on bitcoin hasn’t changed much — with one big exception: He now sees inflation as a headwind for the token instead of a tailwind. But besides that, the Token Metrics research director is still lukewarm about bitcoin compared to its altcoin peers, and said he expects it to stay range-bound between $40,000 and $65,000 over the next two years.
“I just do not see any futuristic catalyst unless markets start to price bitcoin as an inflation hedge, and we are seeing a lot of confusion there,” Farooq said.
The only significant price driver Farooq sees for bitcoin is the same reason he has a hunch that the crypto will one day be treated as an inflation hedge: the next iteration of its halving cycle, which isn’t scheduled to occur until March 2024.
Bitcoin has a capped supply, which is why some have called it “digital gold,” and the 50% reduction in new bitcoin circulated should make each token relatively more scarce, in theory. Either way, Farooq said the bitcoin halving should trigger a surge of investment in the crypto. 
Ethereum, like bitcoin, has done little in recent months to make Farooq more bullish on it, even though it too has the promise of a key technical change on the horizon. Though supply for ether, the native token of the ethereum blockchain, isn’t capped like bitcoin’s is, its upcoming “merge,” or move to a proof-of-stake consensus, may lift sentiment in the near term, Farooq said.
However, ethereum still has “major headwinds” in the medium term, Farooq said, which is why he expects the token to trade between $3,500 to $5,000 indefinitely, like he said in November.
According to Farooq, the main reason why ethereum’s fundamentals aren’t very strong is because the upgrade to Ethereum 2.0 will affect three key parts of its network: its composability, and how it handles execution and settlement.
Composability refers to how decentralized applications on blockchains can leverage and build off of one another “like Lego blocks,” Farooq said. That may be negatively affected as ethereum shifts consensus protocols, the research director said.
“That was the beauty of ethereum,” Farooq said. “So with ethereum 2.0, you have this roadmap where you’ll have sharded architecture, and you’ll have rollup. So execution and settlement and computation all will get fragmented. And this could create issues.”
In November, Farooq shared a trio of altcoins that he saw potential in: Moonriver, Polymath, and Efinity Token.
But now, three different cryptos top the Token Metrics research director’s list heading into the summer. They’re tokens that he said he would be “scared about” as an ethereum investor, even though the larger crypto is unlikely to ever disappear.
“You’ll have different competitors that will carve out their own niches,” Farooq said.
Below are three altcoins that Farooq said he’s currently interested in, along with the symbol, market capitalization, use case, and thesis from Farooq for each. Coincidentally, all three were also top picks by Brian Mosoff, the CEO of Ether Capital, seven months ago.
Symbol: SOL
Market cap: $32.6B
Use case: An ethereum competitor that allows for the creation of decentralized apps, and is designed to improve scalability.
Thesis: “One promising chain, which does not sacrifice on composability, is solana. I feel it’s a monolithic chain while ethereum will become a modular chain. So since Solana is monolithic, execution and computation happen on one chain. And that is something that we have to be mindful of because there are not that many competitors out there that focus on composability. Ethereum will suffer at least in the short-to-medium run on this composability.”
“For example, you have different L2s, which are different rollups. So every L2 will have its own ecosystem, and it kind of fragments the user experience. So for example, if I do yield farming in one rollup L2, then I’ll have to bridge it to another and then settle my transaction in ethereum mainchain. So you have this breakdown of user experience, which Solana wouldn’t have, at least in short to medium run.”
“Solana will become a serious competitor because their focus from the start was on bootstrapping their own native ecosystem, similar to Ethereum.”
“You have this one developed ecosystem, and there is no fragmentation of developers or user experience. So what that means is you’ll have loyal developers similar to what ethereum had in 2017 to 2020. And that makes them a major competitor, in my opinion. Composability, native ecosystem, loyal developers and users — what that means is that solana will be a serious competitor.”
Symbol: NEAR
Market cap: $9.6B
Use case: A layer one blockchain and decentralized application platform that aims to offer faster transaction speeds and scalability.
Thesis: “I’m especially bullish on NEAR protocol in the short term. They’re launching USN, which is a stablecoin, which would be similar to terra luna. NEAR is basically — the architecture is such that whatever ethereum 2.0 is trying to do, they’ve implemented that at the moment.”
“They have the sharded structure. They’re also great for dynamic sharding, which is slightly superior than what ethereum is trying to do.”
“So you also have another serious competitor in terms of NEAR. And NEAR also has a lot of investors backing it.”
Symbol: AVAX
Market cap: $18.8B
Use case: A smart contract platform that offers scalability and speed.
Thesis: “Avalanche is also one of the serious competitors. I would say it is doing what polkadot intended to do but was able to achieve faster, and now you have the whole ecosystem.”
“One good thing about avalanche is their subnets, which will allow people to spin out their own blockchain specific to the application.”

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