The 10th most valuable cryptocurrency, with a market cap of $8.9 billion as of this writing, is none other than Dogecoin (DOGE -1.91%). However, after peaking at almost $0.74 per token in May 2021, the popular meme token has been absolutely crushed, losing 91% of its value. This poor performance mimics what has happened with the broader crypto market.
Die-hard supporters of this dog-inspired crypto, including Tesla CEO Elon Musk, are hoping for Dogecoin to one day reach $1 per token. Let's take a closer look at if this lofty goal, which would represent a 15-fold increase from today's price, is even possible by the end of this decade.
What is Dogecoin?
Created as a fun competitor to the world's most valuable cryptocurrency, Bitcoin (CRYPTO: BTC), Dogecoin is simply just a peer-to-peer payments network. This means that DOGE has no purpose other than to transfer value between two parties in a decentralized manner.
However, Dogecoin seriously lacks when compared to its bigger rival. Bitcoin's market cap of $386 billion is magnitudes larger than Dogecoin. And while Bitcoin is accepted at nearly 7,900 merchants worldwide, Dogecoin can only be used to purchase items from 2,058 different merchants. Some of these businesses, like previously mentioned Tesla or the National Basketball Association's Dallas Mavericks, probably only started accepting DOGE as a marketing tactic and publicity stunt.
What's more, because of Bitcoin's first-mover advantage, having been founded in 2009, it has easily become the most popular cryptocurrency by a wide margin. This has led to the development of a growing list of financial infrastructure, tools, and services to make it incredibly easy for both individuals and institutions to buy, hold, sell, and transact with Bitcoin.
Dogecoin also can't compete with Ethereum (CRYPTO: ETH), whose smart-contract functionality has made it the favorite blockchain for the development of decentralized applications (dApps), including things like decentralized finance protocols and non-fungible tokens (NFTs). While the appeal of these dApps has taken a hit in recent months, Ethereum's potential for real-world use cases is still light-years ahead of Dogecoin's.
Even Dogecoin's two original founders, Billy Markus and Jackson Palmer, both stopped working on advancing the network in 2015, as they saw no promising future for the meme token.
A $1 price target is unlikely
Historically, Dogecoin's price has moved based on tweets by Elon Musk or Mark Cuban. But this is obviously something that other investors can't hope for to make the token rise to $1. The only real path that Dogecoin can legitimately use to appreciate in price is by much wider merchant acceptance. Thanks to Bitcoin's dominance in this area, however, this scenario is unlikely.
If Dogecoin were hypothetically able to reach $1 per token by 2030, its market value would be somewhere around $133 billion. This would make it more valuable than major corporations like Block, Netflix, and Starbucks. Common sense would say that these industry-leading businesses should probably be worth a lot more than Dogecoin.
And with the Federal Reserve aggressively raising interest rates to curb soaring inflation, investor appetite for riskier assets has dwindled. This means that Dogecoin, one of the most speculative assets out there, is losing its standing as an attractive place to park money.
Those bold venturers who purchased DOGE years ago have become wealthy beyond their wildest dreams. But looking ahead toward the rest of the decade, I think investors are wise to avoid this risky meme token.
