At the peak of Dogecoin (DOGE 2.20%) hysteria in 2021, it seemed that millionaires were being minted overnight. But since its peak of nearly $0.75, much has changed.
Today Dogecoin trades for about $0.07, and most of the hype that helped propel it to its all-time high has worn off. Despite losing momentum, Dogecoin still has a loyal community led by the self-proclaimed "Dogefather" Elon Musk himself, leading some to believe that the meme coin might still have the potential to create future millionaires. However, this optimism might be greatly misplaced.
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The speculative nature of Dogecoin
In hindsight, it's easy to see that Dogecoin's meteoric rise was driven solely by social media publicity and viral trends rather than fundamentals. Before its 2021 all-time high, celebrities took to Twitter to proclaim their allegiance to the meme coin, a trend that culminated when Musk appeared on Saturday Night Live to promote the cryptocurrency.
But since that Saturday Night Live appearance, Dogecoin has more or less been in free fall. Aside from the occasional whimsical tweet from Musk, there hasn't been much reason to believe Dogecoin will ever be able to muster another momentous run.
Unlike in 2021, when Dogecoin was center stage, recent tweets from Musk claiming he will continue holding the coin haven't been enough to generate any significant movement in price.
Simply put, it seems that investors have come to the realization that the cryptocurrency lacks any real-world applications and that its only value proposition is directly correlated to Musk.
While its rise to fame was nothing short of historical and paved the way for subsequent meme coins, the lack of underlying technology and use cases limits any potential for long-term growth. Without a strong value proposition, Dogecoin's chances of providing the necessary returns to create millionaires, as it did in 2021, seem astoundingly slim.
A real value proposition
Because cryptocurrencies are typically valued based on the utility they provide and their potential for increased adoption, the harsh reality is that the majority of the asset class isn't worthy of investment.
While some cryptocurrencies claim to provide innovative solutions, only two present real opportunity to create millionaires due to their true long-term utility and value -- Bitcoin (BTC 2.94%) and Ethereum (ETH 1.98%).
Bitcoin, for example, was the first cryptocurrency and revolutionized the industry with its decentralized nature and limited supply. These characteristics have led to it becoming the most valuable cryptocurrency and the premier asset for investors looking to preserve wealth.
A few years after Bitcoin, Ethereum introduced smart contracts and paved the way for the thriving decentralized finance (DeFi) ecosystem that gave birth to non-fungible tokens, decentralized exchanges, stablecoins, and much more. Today, Ethereum dominates the DeFi economy, making up nearly 60% of its total value, and has become one of the most popular blockchains.
Becoming a millionaire through cryptocurrency investments requires a strategic and long-term approach, but it doesn't have to be complicated. While short-term gains from some trending meme coin may seem tempting, they often come with heightened risk, as these coins typically fall just as fast as they rose. The simpler and more likely path to millionaire status is to invest in established cryptocurrencies like Bitcoin or Ethereum with proven track records and widespread adoption.
