With less than one month remaining in 2024, the S&P 500 stock market index is sitting on a gain of 29%. That's nearly triple its average annual gain going back to when it was established in 1957.
However, the cryptocurrency market is trouncing the stock market right now, thanks in part to President-elect Donald Trump's election win on Nov. 5. Crypto industry leaders and meme tokens alike are rocketing higher, and there's no telling when the momentum will fizzle.
Bitcoin is up 120% year to date, but Dogecoin (DOGE +2.32%) is the standout performer with a gain of 375%. Dogecoin currently trades at $0.44 per token, but some crypto analysts think it could more than double from here to reach $1.
The meme token failed to hit $1 during its last speculative run in 2021, but could it get there this time?
Image source: Getty Images.
A crypto-friendly Trump administration is about to take office
Trump was once a cryptocurrency skeptic, but as his bid for reelection gathered momentum in 2024, he took a more open-minded stance to broaden his potential voter base. Now, he might even be described as a crypto advocate.
In just the past few months, he told voters he would like to see the U.S. government establish a strategic Bitcoin reserve, and after winning the election, he nominated pro-crypto businessman Paul Atkins to run the Securities and Exchange Commission (SEC). Enthusiasts believe Atkins will implement crypto-friendly regulations, potentially opening the door to new use cases that will help create more value.
But Dogecoin investors received their own special present. Tesla Chief Executive Officer Elon Musk put his cash and his influence behind the Trump campaign, which undoubtedly helped the now president-elect get over the line. As a result, Trump appointed him to run a new agency called the "Department of Government Efficiency," or DOGE for short.
The acronym is a nod to Dogecoin, which Musk called his favorite cryptocurrency when the token was soaring during 2021. The purpose of DOGE is to slash costs across the U.S. government, and there is no indication that Dogecoin will play any sort of role. But that didn't stop speculators from sending the token soaring in value anyway.
Dogecoin still lacks real fundamentals
Dogecoin opened 2021 at a price of $0.0046, and it soared 15,769% within five months to hit a record high of $0.73. Musk was a big proponent of that incredible rally, as he regularly promoted Dogecoin on social media and even during his appearance on Saturday Night Live on May 8 of that year.
However, the move was based entirely on speculation, and Dogecoin soon plummeted. Musk tried to support the community by accepting Dogecoin for certain items of merchandise at Tesla near the end of 2021, but it wasn't enough to stop a 92% plunge by mid-2022.
CRYPTO: DOGE
Key Data Points
Simply put, it's almost impossible for cryptocurrencies like Dogecoin to maintain their value unless investors view them as true stores of value (like Bitcoin), or unless consumers and businesses use them in transactions. Dogecoin still hasn't reclaimed its 2021 high, and just 2,503 merchants accept Dogecoin as payment worldwide (according to Cryptwerk), so the meme token isn't ticking either of those boxes.
Hitting $1 is possible, but it probably won't stay there
Based on Dogecoin's current price per token of $0.44 and its total supply of 147.1 billion tokens, it currently has a market capitalization of $64 billion.
Simple math suggests that a price per token of $1 would give Dogecoin a market capitalization of $147.1 billion. That isn't entirely impossible considering Bitcoin now has a market cap of $2 trillion.
Bitcoin has better fundamentals because it has a fixed supply, whereas new Dogecoins can technically be minted indefinitely. Plus, the SEC has approved dozens of Bitcoin exchange-traded funds (ETFs) this year, giving financial advisors and institutional investors a safer, regulated way to invest in the cryptocurrency.
However, it's still just a vehicle for speculation -- investors buy Bitcoin in the hopes it will trade at a higher price in the future, not because it produces earnings or has any intrinsic value.
Since the Trump administration is likely to be a friend to the crypto industry for the next four years, it isn't outside the realm of possibility that Dogecoin blows past its previous all-time high of $0.73 and hits $1 in the near future. However, I think it will be a replay of 2021, so a steep plunge of more than 90% will probably follow eventually.
Dogecoin simply doesn't have any real fundamentals to sustain its value over the long term, and since more tokens are constantly being minted, that supply will constantly eat away at the price per token. Investors should definitely be careful buying it here.
