Crypto winter is the time to invest: Animoca Brands crypto analyst

  • Mehdi Farooq is an analyst at Animoca Brands.
  • Farooq explained why savvy investors can capitalize on undervalued crypto assets right now.
  • He explains why the current bitcoin price is right and why the polygon is about to skyrocket.

Between mass layoffs at seemingly stable companies, projects collapsing and leaving investors to bear the brunt, and the overall market meltdown, 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 – now is exactly the time to capitalize on undervalued cryptocurrencies.

In a recent interview with Insider, he explained why he thinks bitcoin can still be considered a store of value and highlighted some crypto projects he’s still a fan of.

Why bitcoin is a store of value

A popular investment thesis for bitcoin is that it serves as a store of value to hedge against inflation, as there will never be more than 21 million bitcoins.

However, this thesis does not seem to hold up. As the market enters record high inflation, bitcoin’s value has contracted from $46,800 in January 2022 to below $24,000 today.

But Farooq thinks this current value is fair and actually reinforces the thesis of bitcoin as a store of value.

“I feel there’s an appetite for millennials and gen Z to have a new form of gold that they can resonate with, that they think is native to web3, and that’s the anchor of all asset classes coming up,” Farooq said. “So because of that narrative, it will still have value and it will capture market share in gold.”

When Farooq calls bitcoin an “anchor”, he means that other tokens use bitcoin to some degree. For example, if Coinbase users want to buy a crypto that is not available on the platform, they can send their bitcoin to another exchange where they could buy the crypto they are interested in.

In other words, bitcoin acts as a bridge for users to buy other cryptocurrencies, and will remain relevant even as new cryptos come online or blockchain projects start using different tokens.

“Now I think around $20,000 to $30,000 the valuation will be around a trillion,” Farooq said of the bitcoin price. “So that’s about 10-15% of gold’s market share, which I think, given the risk-reward, is pretty valued for me.”

Where to invest in the crypto winter

While Farooq thinks the price of bitcoin is fair, he thinks the crypto winter is an opportune time for investors to acquire undervalued crypto companies.

Farooq noted that cryptocurrencies are inherently risky by their nature, and risky assets are understandably impacted by Federal Reserve policies at this time. The Fed’s method of stopping inflation is to raise interest rates, which reduces investors’ appetite for risk, and both stock and cryptocurrency prices suffer.

But it’s more about timing, in Farooq’s view, than issues with the risk assets themselves — and it creates an opportunity for savvy investors.

“To me, it creates the perfect environment for long-term investors to actually take advantage of this spread,” Farooq said.

He continued: “For investors with a risk appetite and a time horizon of three to five years, this will be a unique opportunity to grab some of these growth assets for a cheaper valuation.”

Farooq suggests Polygon as a project that he believes will only grow in value over the next few years. Farooq says that by investing in Polygon’s matic token, an investor gains “index-level exposure” not only to NFTs, but also to promising crypto sectors like gaming and the metaverse.

He provided three specific reasons why he is bullish on the polygon.

1) Partnerships with Web2 companies

The number one reason Farooq is bullish on polygon is its powerful partnerships with industry-leading companies.

“All Web2 companies entering the Web3 space are leveraging matic. Disney, for example, selected Polygon for its Web3 acceleration program,” Farooq said.

In fact, polygon was the only crypto company to be selected by Disney for its 2022 accelerator program.

He continued, “You asked Facebook to use matic for Instagram, and Draftkings, which is a sports betting company, they’re all partnered with matic.”

Other prominent companies that Polygon has partnerships with include Macy’s, Stripe, and Adobe.

2) High beta move on ETH meltdown

Farooq believes Polygon is well positioned to take advantage of the upcoming Ethereum merger. The next merger scheduled for September 2022 will move the Ethereum blockchain from proof-of-stake to proof-of-work. While Ethereum’s cryptocurrency ether has already started to rise in anticipation of the event, Farooq believes Polygon will also capitalize on the merger.

“They’re building seven commodities on top of ETH, so you have a seven times type advantage to play them,” Farooq said.

He specifically cited the avail, hermez, and zero polygon projects as promising ethereum-polygon projects.

3) Take advantage of Indian talents

Finally, Farooq believes that polygon, an India-based company, has a strategic advantage over other crypto companies in capturing Indian blockchain talent.

India is a technological powerhouse. According to the National Science Foundation’s 2018 Science and Engineering Indicators report, India produces around 1.8 million engineering graduates annually – or in other words, around 25% of the world’s engineers come from India.

While Farooq believes Polygon is strategically placed to capture this intellectual capital, Polygon’s own founder, Sandeep Nailwal, believes the country risks a “mass exodus” of its crypto talent due to the country’s hostile attitude towards assets. digital.

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