- Crypto expert Mehdi Farooq said that Bitcoin and Ethereum may be bandwidth-hungry for some time.
- The director of research at Token Metrics has shared three altcoins he’s beating instead.
- Each of them could pose a serious threat to ethereum, even if the larger cryptography persists in the long term.
Bitcoin and Ethereum may be victims of their own success. The two largest cryptocurrencies, in the eyes of many, have enjoyed legitimate digital assets over the past half-decade – but in doing so, they have laid the foundation for a wave of new competitors that are building superior networks.
Contrary to what bitcoin maxis will discuss, Mahdi Farooq, director of research at Token Metrics, said in a recent interview with Insider, “There is definitely better technology out there.”
But while Farooq does not see Bitcoin or Ethereum posting significant gains anytime soon, he also said he is not trending lower as they both hit a wide range, allowing them to stay long-term.
“Cryptography is all about network effects,” Farooq told Insider. “So you don’t have to have super technology to make it happen. That’s why there’s so much focus on marketing.”
Cryptocurrencies big and small have, for the most part, had a terrible year. Concerns about hyperinflation – and the Federal Reserve’s decision to quickly raise interest rates in response to it – have gripped the cryptocurrency market and are worth watching closely, according to Farooq.
“Monetary policy and fiscal policy in the US have been very loose,” Farouk said. “Now you’re going to see the Fed raise interest rates aggressively. That’s something the markets don’t appreciate.”
What’s next for Bitcoin and Ethereum? More of the same
Contrary to many of his contemporaries who predicted that Bitcoin would surpass $100,000 in 2021, Farooq did not get carried away with setting a target price for the token. He told Insider in late November that he believes bitcoin will only hit $70,000 over the next 18 months — a level it nearly reached just two weeks ago. It has since fallen by about 30% from the mid-$50K to $39,800 today.
Five months later, Farouk’s opinion on bitcoin hasn’t changed much – with one big exception: he now sees inflation as a headwind for the token rather than a tailwind. But besides that, Token Metrics research director remains lukewarm about bitcoin compared to its peers, and said he expects it to remain in the $40,000-$65,000 range over the next two years.
“I don’t see any catalyst going forward unless the markets start pricing bitcoin as a hedge against inflation, and we’re seeing a lot of confusion there,” Farooq said.
The only significant price driver Faruk sees for bitcoin is the same reason he feels the cryptocurrency will one day be treated as an inflation hedge: the next iteration of the halving cycle, which is not scheduled until March 2024.
Bitcoin has a limited supply, which is why some have called it “digital gold,” and a 50% reduction in new bitcoin in circulation should make each coin relatively rarer, in theory. Either way, Farooq said that the Bitcoin halving should lead to increased investment in the cryptocurrency.
Ethereum, like Bitcoin, hasn’t done much in recent months to make Farooq more bullish on it, although it also promises a major technical change on the horizon. Despite the provision of Ether, the original token of the Ethereum blockchain, has not been tied down like Bitcoin, the upcoming “merger,” or the move to
Farouk said the consensus could lift sentiment in the near term.
However, Farooq said that Ethereum still faces “significant headwinds” in the medium term, which is why he expects the coin to trade between $3,500 and $5,000 indefinitely, he said in November.
According to Farouk, the main reason why Ethereum fundamentals are not so strong is that an upgrade to Ethereum 2.0 will affect three main parts of its network: its scalability, and how it handles execution and settlement.
Farooq said that the compatibility refers to how decentralized applications on the blockchain can benefit from and build on each other “like Lego blocks.” The director of research said that this could be negatively affected as Ethereum changes consensus protocols.
“That was the beauty of Ethereum,” Farouk said. “So with ethereum 2.0, you have this roadmap where you will have a fragmented architecture, and you will have an update roll. So the implementation, the settlement and the computation will become fragmented. And that can create issues.”
3 promising cryptocurrencies worth watching
In November, Farooq shared three altcoins he saw potential in: Moonriver, Polymath and Efinity Token.
But now, three different cryptocurrencies are topping the list of Token Metrics research managers in the summer. It’s tokens he said he would be “afraid of” as an ethereum investor, even though the biggest cryptocurrency is unlikely to ever disappear.
“You will have different competitors who will innovate their own fields,” Farouk said.
Below are three alternative coins that Farouk said he is currently interested in, along with the symbol, market value, use case, and thesis from Farouk for each. Coincidentally, all three were also top picks made by Brian Mussoff, CEO of Ether Capital, seven months ago.