What happened
Battling to retain a top-10 spot in terms of the cryptocurrency rankings by market capitalization, Dogecoin (DOGE -0.68%) is still on the list. However, today's 24-hour decline of 7.3% as of 4 p.m. ET has pushed Dogecoin into 10th spot, one spot behind Polygon (MATIC 0.24%).
Polygon has also declined, losing 1.9% over the past 24 hours as of 4 p.m. ET. However, this is also a token that's seen much more significant outperformance when compared to its large-cap peers in recent weeks, as a result of strong fundamentals, particularly in terms of the network's NFT sales. Sales of non-fungible tokens on Polygon's layer-2 scaling network has outpaced Ethereum by a rather wide margin in January, spurring significant interest in this high-growth project into February.
Dogecoin's relative lack of catalysts today, combined with some rather broad-based selling pressure, has led to significant underperformance relative to Polygon and other utility-based tokens.
So what
The big catalyst that led to recent spikes in Dogecoin had to do with, you guessed it, Elon Musk. The self-proclaimed Dogefather hinted at turning Twitter into a payments network at the end of January. Naturally, the Dogecoin community jumped on this news, and jumped to the conclusion that any such payments network would have to be powered by Dogecoin.
Maybe. But herein lies the difference between certain meme projects such as Dogecoin and Polygon, for example. Speculative catalysts can result in near-term spikes, and when there's excitement in the market, it's all-out exuberance for such projects. However, on days like today when there's little positive to talk about in the market, Dogecoin can significantly underperform.
Now what
I find Polygon's recent fundamental performance (1.5 million NFT sales on Polygon's network relative to 1.1 million sales on Ethereum in January) to be compelling. There are numbers and data to back up an investment in Polygon. With Dogecoin, not so much.
Thus, the question of how and why Dogecoin retains its top-10 spot in the cryptocurrency market capitalization rankings may get more discussion. I'm not sure any meme token, which derives a significant portion of its value from speculation and hype, should be listed among the big utility-generating players. But that's just me.
Today, Dogecoin has moved one spot closer to being relegated to a top-15 spot, like its meme token peer Shiba Inu. For better or worse, I think it's likely that Dogecoin will continue to move down the rankings, as investors value substance over hype whenever the next bull market rally begins (who knows, maybe it's already underway).
