Although Dogecoin (DOGE -0.93%) has seen its price skyrocket nearly 15,000% since its launch, it is down 88% from its May 2021 all-time high. The meme stock craze of roughly two years ago helped propel this dog-inspired token to unfathomable heights, gains that it has mostly given back. Dogecoin holders are hoping it can go "to the moon" again.
Dogecoin's peak historical price is just under $0.74. If it hits $1 per token, that translates to a 12-fold increase from today's price of about $0.087. Can this popular cryptocurrency reach that level? Let's take a closer look.
Recent developments are moving the price
It's hardly a surprise that Dogecoin's price action, like that of many cryptocurrencies, is driven largely by speculation and hype cycles. Two years ago, investors pushed up the prices of so-called meme stocks GameStop and AMC Entertainment to levels not rooted in their financial fundamentals. This behavior transferred to digital assets as well, and Dogecoin owners benefited tremendously.
Perhaps the most noticeable influence is Tesla Chief Executive Officer Elon Musk's public support of Dogecoin over the past couple of years. His tweets can quickly push up the price, excitement that fades soon enough. More recently, Musk changed the Twitter logo to an image of a Shiba Inu dog, which Dogecoin uses as its mascot and visual representation. Unsurprisingly, this sent Dogecoin's price soaring in no time, but it's now down about 12% since that April 4 recent high.
Furthermore, Dogecoin supporters have been waiting for the tech mogul to integrate Dogecoin payments into the social-networking app. The specualtion is that this would drastically increase the utility of the token, supporting demand and pushing up the price. However, this has yet to come to fruition.
The only way that I can see Dogecoin reaching $1 is if there is just an immense amount of buying interest from the market for whatever reason. But this is impossible to predict, and it isn't something that people should put their life savings behind. As a result, it's best to temper expectations about Dogecoin's price potential.
DOGE holders should temper expectations
Besides experiencing a speculative craze like the one it experienced in early 2021, it seems unlikely Dogecoin could hit $1 per token simply based on the fundamentals. Maybe it will have real-world uses in the future. But this is where the cryptocurrency truly has no advantage.
Built really as a joke to rival Bitcoin, Dogecoin is its own crypto network, relying on its developers and users to grow. That's where its features end. Shiba Inu, another dog-themed token, was created to be compatible with the broader Ethereum network, which opens it up to various decentralized exchanges, non-fungible token (NFT) marketplaces, and wallets. This isn't really the case with Dogecoin. As a result, its only use case is as a tool for financial speculation.
Then there's the token economics to consider. Currently, there are nearly 139 billion Dogecoin tokens outstanding. If that sounds like a silly amount, that's because it is. Dogecoin was made to be abundant, not intentionally scarce like Bitcoin, with its maximum possible supply of 21 million tokens. Making matters worse is the fact that every single minute, 10,000 new tokens are created. For Dogecoin to hit $1 per token, demand has to rise faster than supply. But with no reason for anyone to own Dogecoin, besides the hope that its price will quickly pop, that is very unlikely.
To its credit, Dogecoin has amassed enough interest from the community to make it the eighth-most-valuable crypto network today, with a market cap of $12 billion. But even the two co-founders of Dogecoin, Billy Markus and Jackson Palmer, stopped working on it years ago. This should tell you everything you need to know about Dogecoin's long-term viability.
