Dogecoin (CRYPTO: DOGE) remains one of the world's most popular meme coins as well as the meme coin of choice for billionaire Elon Musk. However, Dogecoin has been wildly underperforming this year. Dogecoin is up less than 4% for the year, compared to 67% for Bitcoin (CRYPTO: BTC) and 55% for Ethereum (CRYPTO: ETH).
If you are thinking about buying Dogecoin, it could be time to reconsider. Here are three factors to keep in mind.
The Twitter factor
The primary allure for holding Dogecoin right now involves Twitter. That's because Elon Musk, the new owner of Twitter, is one of the biggest supporters of Dogecoin. As soon as Musk suggested he might buy Twitter back in April 2022, Dogecoin's price soared. And that has pretty much been the pattern for the past year -- nearly any announcement from Musk that seems to hint at some sort of Twitter integration has boosted the price of this meme coin.
Image source: Getty Images.
However, very little seems to have happened in terms of actual Dogecoin integration with Twitter. Yes, Elon Musk caused a stir in April when he briefly substituted the Dogecoin mascot (a Shiba Inu dog) for Twitter's familiar bird icon. And yes, Elon Musk has suggested that crypto payment functionality is coming to Twitter, and that would seem to be favorable for Dogecoin.
But like everything else with Dogecoin, there seems to be a lot of hype and speculation but no real achievements.
Where are the upgrades?
Another factor that should concern investors is that nothing ever seems to change with the underlying Dogecoin blockchain. It's still the same old proof-of-work blockchain that has been around since 2013.
In the meantime, though, we've seen a broad transition in the crypto world to faster, cheaper, and more efficient proof-of-stake blockchains. And these proof-of-stake blockchains have become even faster and more efficient thanks to their embrace of Layer-2 scaling solutions.
But Dogecoin has shown little or no willingness to embrace proof-of-stake technology. This despite the assurances of Ethereum founder Vitalik Buterin that he would personally take a role in the transition process. Third-party developers have made some efforts to build a better Dogecoin blockchain, but the core Dogecoin developer team has not made this a priority.
My concern, quite simply, is that Dogecoin is getting left behind. Other blockchains are off to the races when it comes to blockchain gaming, decentralized finance, and the metaverse. Dogecoin, meanwhile, is still trapped by its legacy of being a blockchain usable only for payments. That could explain why Elon Musk has been so noncommittal about how exactly he plans to integrate Dogecoin.
Other meme coin competitors
Keep in mind, too, that Dogecoin isn't the only meme coin in the market. When it launched in 2013, it stood alone as a sort of financial curiosity, and crypto investors embraced it. But then came Shiba Inu (CRYPTO: SHIB) in 2020, and suddenly, Dogecoin was no longer the hottest meme coin around.
At about the same time, investors started to see a proliferation of other dog-themed meme coins, many of them directly positioning themselves as potential replacements for Dogecoin. The newest rivals promise everything from non-fungible token (NFT) gaming to doggy-themed metaverse worlds, giving them much more utility than the original Dogecoin.
Should you buy Dogecoin?
In the final analysis, Dogecoin offers little to no utility, has failed to capitalize on its relationship with Elon Musk and Twitter, and is no longer even the hottest meme coin in the market right now. (That distinction now falls to a frog-themed token with a billion-dollar market cap.) Worse, Dogecoin is not even keeping pace this year with market leaders such as Bitcoin in terms of price appreciation.
Dogecoin, which trades for just $0.07196 these days, has never broken through the $1 mark in its nearly 10 years of existence. Its all-time high is just $0.7376. So stop hoping for a miracle. For Dogecoin to regain its all-time high would require a 10-fold increase. Now is the time to sell.
