1 Top Cryptocurrency to Buy Before It Soars 260%, According to This Popular Analyst

The price of Polkadot (CRYPTO: DOT) reached an all-time high of $54.98 on November 4, 2021. This represented a massive 18,859% gain from the token’s initial coin offering price of $0.29 in October 2017. However, today it trades for around $6. Like many other altcoins, Polkadot has lost its appeal as rising interest rates have led investors to more conservative investments.

However, some top analysts remain optimistic about Polkadot’s growth potential. Michaël van de Poppe, CIO and founder of MN Trading, recently told his 723,000 followers on X that the altcoin’s price could more than triple to $17 to $22 in the short term. Should investors follow this advice and buy this oft-overlooked altcoin today?

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What sets Polkadot apart from other altcoins?

Polkadot’s blockchain was created by Gavin Wood, one of the co-founders of Ethereum (CRYPTO: ETH). Like Ethereum, Polkadot currently uses an energy-efficient proof-of-stake (PoS) method that stakes tokens instead of mining them, rather than the energy-intensive proof-of-work (PoW) method used to mine Bitcoin (CRYPTO: BTC).

While PoS blockchains are often used to develop decentralized applications (dApps) and other tokens, the PoW method is used only to mine native tokens. As a result, PoS tokens are often valued for the speed of their transactions and the expansion of their underlying developer ecosystems, while PoW tokens are valued for their rarity and acceptance as mainstream assets.

Polkadot processes transactions faster than Ethereum and many other PoS blockchains. It does this through “parachains,” a new feature that allows multiple blockchains to work together on the same platform. These parachains make Polkadot cross-compatible with a wide range of incompatible blockchain networks, making it an attractive starting point for developers to create cross-chain dApps, tokens, and other crypto assets.

Polkadot’s flexibility allows its ecosystem to expand by locking in new blockchain partners, including open-source game launcher Heroic and community-driven funding platform Polimec Protocol. Its community also plans to allocate three million Polkadot tokens (worth $18 million) to fund the development of more decentralized finance (DeFi) applications. Some developers also see this as a fertile foundation for developing new AI applications.

So can Polkadot break out of this niche?

Polkadot’s technology looks promising, but investors should be aware of three major weaknesses. First, Polkadot still processes transactions at a much slower rate than Solana (CRYPTO:SOL), the world’s fastest PoS blockchain. Therefore, developers who value raw speed over cross-chain compatibility will likely stick with Solana.

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Second, Polkadot’s parachain is a double-edged sword. It opens the door to smart contracts on other blockchains, but this cross-compatibility also exposes it to a wider range of security breaches. Additionally, there are a limited number of parachains on the blockchain, and those slots are auctioned off to the highest bidder. If those prices rise too quickly, potential developers could flock to cheaper blockchains.

Finally, Polkadot’s supply is inflationary, growing at a rate of 10% per year. Ethereum, which temporarily became deflationary after The Merge (the transition from PoW to PoS mechanism) in 2022, currently has an annual inflation rate of only 0.3% to 0.5%. This increased supply could limit Polkadot’s near-term gains.

Should investors buy Polkadot right now?

Michaël van de Poppe’s Polkadot analysis seems more technical than fundamental. He says that if it breaks the major resistance at $9,295, it could rally from $17 to $22.

We should take this forecast with a pinch of salt, as the broader crypto market is still weighed down by Bitcoin’s recent woes and the weakening outlook for rapid interest rate cuts. However, potential approvals of the first spot-priced Ether ETFs could fuel Polkadot and other PoS tokens in the second half of the year.

Polkadot is an interesting cryptocurrency that seems to be much more useful than other meme coins. Speculative investors could nibble on the token at these prices, but it could easily be halved before doubling or tripling again.

Should you deposit $1,000 into Polkadot now?

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.

The 10 Best Cryptocurrencies to Buy Before They Go Up 260%, According to This Popular Analyst, originally published by The Motley Fool