In 2013, two friends named Billy Markus and Jackson Palmer felt the cryptocurrency industry was taking itself too seriously. Many enthusiasts were excited by the soaring price of Bitcoin, which went from $20 to $800 that year. They really believed they were on to something big (and looking back, they were absolutely right).
To lighten the mood, Markus and Palmer launched their own cryptocurrency in December 2013 called Dogecoin (DOGE +3.58%). It was inspired by the "Doge" meme, which was spreading across the internet at the time. In other words, the friends created Dogecoin as a joke, and they openly admit it.
However, they watched their creation rapidly soar in value, and despite sending investors on a crazy roller-coaster ride over the last 12 years (more on that in a moment), Dogecoin still has a market capitalization of $51 billion, as of this writing.
Dogecoin currently trades at just $0.35 per token, but with a series of potential tailwinds in the pipeline, could now be a good buying opportunity while it's still below the milestone price of $1?
Dogecoin led several top cryptocurrencies higher in 2024
Dogecoin was one of the best-performing cryptocurrencies last year, with a whopping 250% gain, beating industry leaders like XRP, Ethereum, and even Bitcoin:
Dogecoin Price data by YCharts
Most of the gains occurred after Nov. 5, when President Trump won the election. He campaigned on a pro-crypto agenda, promising friendly policies and deregulation to pave the way for new use cases that could drive value across the industry. He even told investors he plans to make America the crypto capital of the world.
Elon Musk was a big financial backer of Trump's presidential campaign, and after the election, Trump appointed him as the head of a new initiative tasked with identifying ways to cut government spending. It's called the Department of Government Efficiency, or DOGE for short, which is a reference to Dogecoin.
Why? Because Dogecoin happens to be Musk's favorite cryptocurrency.
The Elon Musk effect
Musk's interest in Dogecoin dates back to 2021, when he regularly promoted it on social media. His antics were a big reason it soared 15,769% in just five months between the start of 2021 and May 8, which is the date he appeared on Saturday Night Live and participated in a Dogecoin-themed skit.
Dogecoin reached a record high of $0.73 during that show, a level it still hasn't surpassed. This marked the moment when investors realized Musk had no tangible plan to support the token's value beyond his social media banter. By mid-2022, Dogecoin had lost more than 90% of its peak value.
CRYPTO: DOGE
Key Data Points
That brings me to a very important point: Dogecoin is merely a vehicle for speculation. It hasn't mustered any real-world utility since it was founded in 2013 -- it isn't widely accepted by businesses as payment for goods and services, nor is it a reliable store of value. There is also zero indication the token will play a role in the new DOGE initiative.
Supply is one of Dogecoin's biggest barriers to creating sustainable value. Around 147.7 billion tokens are currently in circulation, and although there is an annual cap on additional supply, new Dogecoins can technically be "mined" every year until the end of time. That means supply is practically infinite, which will serve as a counterweight every time the price-per-token rallies higher.
Image source: Getty Images.
Dogecoin could reach $1, but it probably won't stay there
Dogecoin's post-election rally recently stalled at $0.47, which is still way below its record high from 2021. It might be a sign investors are finally expressing caution about the speculative nature of the meme token, especially since other cryptocurrencies like Bitcoin have climbed to new highs.
But it's impossible to predict the end of speculative runs, especially when the catalyst is still active -- in this case, it's the crypto-friendly Trump administration that's supporting bullish investor sentiment across the industry. Therefore, maybe Dogecoin is just taking a breather before resuming its latest rally.
If Dogecoin were to finally reach $1 per token, its market capitalization would be $147 billion. That would still be a mere fraction of Bitcoin's $2 trillion market cap, which is why I think it's possible (but not probable) with a powerful enough speculative run.
Staying at that level will be the hard part. Remember, new Dogecoin supply is constantly hitting the market, which places downward pressure on its price. Plus, since there are no concrete fundamentals to support $147 billion worth of value, there is likely to be a sharp collapse at some point in the future.
In my opinion, Dogecoin will eventually lose more than 90% of its value, just like it did after its 2021 bull run. Therefore, investors should probably avoid it -- no matter its current price.
