A crypto analyst at Sequoia and Soros-backed investment firm Animoca Brands explains why the bear market is a ‘one-in-a-generation opportunity’ to invest in crypto cheaply. He also shares why an altcoin project in particular is poised to explode.
Why is Bitcoin a store of value?
Amid massive layoffs at seemingly stable companies and the general market crash, many investors are fed up with the crypto winter. However, according to Mehdi Farooq, an analyst at Animoca Brands, the powerhouse behind crypto projects like The Sandbox, this is exactly the time to capitalize on low-value cryptocurrencies. In a recent interview, the analyst explained why Bitcoin can still be considered a store of value.
As you follow on Kriptokoin.com, a popular investment thesis for Bitcoin is that it acts as a store of value to hedge against inflation. Because there will never be more than 21 million Bitcoins. However, this doesn’t seem to hold up fast. Bitcoin value plummeted as the market plunged into record high inflation. It fell from $46,800 in January 2022 to below $24,000 today. But Farooq says that current value is fair. It actually supports the thesis of Bitcoin as a store of value. The analyst makes the following statement:
I feel like millennials and millennials have an appetite for a new form of gold that they can resonate with, which they think is unique to web3 and is the nexus of all future asset classes. So, because of this narrative, it will still have value.
“It will take 10% to 15% of the market share of gold”
Mehdi Farooq sees Bitcoin as an ‘anchor’. This means that other tokens are using Bitcoin in some capacity. For example, Coinbase users may want to buy crypto that is not available on the platform. In this case, it is possible for them to send their Bitcoins to another exchange where they can buy the crypto they are interested in.
In other words, Bitcoin acts as a bridge for users who want to buy other cryptocurrencies. It will remain relevant even when newer cryptos come online or Blockchain projects start using different tokens. Farooq shares his views on Bitcoin price:
Now, I think it’s around $20,000 to $30,000. The valuation will be around one trillion. It will take 10% to 15% of the market share of gold, which is very valuable to me. So that’s possible, I think, given the risk reward.
Altcoin that the analyst sees opportunity: Polygon (MATIC)
Mehdi Farooq says that Bitcoin is at a pretty good price. He also notes that the crypto winter is a good time for investors to buy undervalued crypto companies. The analyst states that cryptocurrencies are inherently risky. That’s why he notes that risk assets are naturally harmed by Fed policies at the moment. The Fed’s way of stopping inflation is to raise interest rates. This reduces the risk appetite of investors. As a result, stock and cryptocurrency prices fall.
But according to Farooq, it’s more a matter of timing than any issue with the risk assets themselves. So this creates an opportunity to differentiate investors. “For me, this creates the perfect environment for long-term investors to really take advantage of this discrepancy,” the analyst says. In this context, Farooq comments:
For investors with a risk appetite and a time horizon of three to five years, getting some of these potential assets at a cheaper value will be a once-in-a-generation opportunity.
Farooq says Polygon (MATIC) will only increase in value over the next few years. The analyst explains what it means for an investor to invest in this altcoin project. According to the analyst, it means investment not only in NFTs but also in promising crypto industries such as gaming and metaverse.
Three specific reasons why this altcoin project is on the rise
Partnerships with Web2 companies
The first reason Farooq is optimistic about the altcoin is its strong partnerships with industry-leading companies. “All Web2 companies entering the Web3 space are benefiting from MATIC. For example, Disney chose Polygon for its web3 accelerator program,” he says.
In fact, Polygon was the only crypto company selected by Disney for its 2022 acceleration program. Farooq said, “You made Facebook use MATIC for Instagram. Draftkings, a sports betting company, is all partnering with MATIC,” he explains. Polygon has partnerships with Macy’s, Stripe, and Adobe, among other leading companies.
High beta move on ETH Merge
Farooq says Polygon is well positioned to take advantage of the upcoming Ethereum Merge. Set to be held in September 2022, Merge will migrate Ethereum to Proof-of-Stake (PoS). The Ethereum (ETH) price has already started to rise in anticipation of the event. However, Farooq notes that Polygon will also benefit in Merge.
“They are building seven products on ETH. So you have a seven-x kind of advantage to play them,” he says. In particular, he cites Polygon’s Avail, Hermez and Zero projects as promising Ethereum-Polygon projects.
Leveraging Indian talent
Finally, Farooq states that Polygon, an India-based company, has a strategic advantage over other crypto companies in capturing Indian Blockchain talent. India is a tech powerhouse. According to the National Science Foundation’s 2018 Science and Engineering Indicators report, India produces approximately 1.8 million engineering graduates annually. In other words, roughly 25% of the world’s engineers come from India.
Farooq says Polygon was strategically placed to capture this intellectual capital. Polygon’s own founder, Sandeep Nailwal, on the other hand, thinks the country is at risk of a ‘mass exodus’ of crypto talent due to the country’s hostile attitudes towards digital assets.
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