Dogecoin (DOGE +0.46%) is the cryptocurrency industry's original meme token. It was founded in 2013 by two friends who used the Doge internet meme as inspiration and, in their own words, the entire exercise was a joke.
But those who believed in Dogecoin's potential had the last laugh, because its market capitalization soared to a peak of about $90 billion in 2021. Unfortunately, a lack of any true use case, combined with a consistently growing supply of tokens, contributed to a 74% decline in Dogecoin's value since then.
But the cryptocurrency industry has the wind at its back right now, because President Donald Trump and his administration have enacted a series of policies supportive of crytpo. Dogecoin is currently trading at about $0.19 per token, so should investors scoop it up while it's still below $1?
Image source: Getty Images.
Pro-crypto policies don't really favor Dogecoin
While on the campaign trail last year, Trump vowed to make America the crypto capital of the world. He has already made a series of personnel appointments and enacted several policies to make good on that promise, but they have mostly benefited larger cryptocurrencies like Bitcoin (BTC +1.51%) and XRP (XRP +1.14%) so far.
For example, the president appointed crypto advocate Paul Atkins to run the Securities and Exchange Commission (SEC). Under his leadership, the agency has paused or withdrawn major lawsuits it had initiated against crypto exchanges like Binance and Coinbase, and against crypto issuers like XRP creator Ripple.
Dogecoin won't benefit much from friendlier regulation because it doesn't have a real use case. Only 2,090 merchants are willing to accept it as payment for goods and services worldwide (according to crypto directory Cryptwerk), and it isn't considered to be a legitimate store of value because of its growing supply and extreme volatility.
Trump also issued an order to establish a strategic Bitcoin reserve, where the government will store coins it seized as a result of criminal activity, which was viewed as bullish for the world's largest cryptocurrency. At the same time, he ordered the establishment of a digital asset stockpile, which will hold seized coins and tokens other than Bitcoin, but the government doesn't own any Dogecoin, so the meme token is unlikely to be included.
Dogecoin's biggest supporter exited the White House in May
Tesla Chief Executive Officer Elon Musk was a major force behind Dogecoin's meteoric rise several years ago. He has supported the token since 2019 by sharing memes and participating in banter with other enthusiasts on social media. He even called it his favorite cryptocurrency at one point.
Musk appeared on an episode of Saturday Night Live on May 8, 2021, and nvestors speculated that he would make a grand announcement about Dogecoin during the show. The token subsequently soared to an all-time high of $0.74 that day, but it plummeted when Musk did nothing but participate in a comedy skit. By mid-2022, it had lost more than 90% of its peak value as Musk's influence faded.
CRYPTO: DOGE
Key Data Points
Dogecoin was mostly dormant in 2023 and for most of 2024, until Trump was elected president. Musk was a big supporter of Trump's campaign, and the president quickly appointed him to run the Department of Government Efficiency, or DOGE for short. It was tasked with cutting wasteful spending to help bring down the national debt, and investors interpreted the agency's name as a clear nod of support for Musk's favorite cryptocurrency.
There was never any indication that Dogecoin would play a concrete role in DOGE, but it didn't stop the meme token from soaring by more than 300% to a new 52-week high of $0.47 shortly after Trump's election win.
Musk's tenure with DOGE ended in May because he was only allowed to spend 130 days working as a "special government employee." He and Trump have since locked horns following a series of policy disagreements, so it's unlikely he will return in any capacity. This could put an end to any speculation that Dogecoin will eventually find a use case within the government.
A growing supply might prevent Dogecoin from reaching $1
Since we've covered Dogecoin's clear lack of utility, the only question remaining is whether another speculative rally could propel the meme token to new heights. I think it's unlikely, but not only because Musk's influence is slowly fading once again.
There are 150.1 billion Dogecoin tokens in circulation as of this writing (July 14). There is a cap on how many new tokens are added to the total supply each year, but there is no end date. In other words, new Dogecoin tokens can be "mined" until the end of time, so supply is practically infinite.
Any investor who owns Dogecoin is constantly being diluted, which means the intrinsic value of their tokens will steadily decline over time, even if they do nothing but simply hold them. Personally, I've never come across an asset that appreciates in value over the long term if it has a never-ending stream of new issuance. Bitcoin's scarcity is one of the reasons it continues to make new highs -- its supply is capped at 21 million coins, so once they are all mined, no more will enter circulation.
Therefore, I don't think Dogecoin is a good buy right now, and I think its chances of ever reaching $1 are slim. In fact, it becomes harder and harder for Dogecoin to reach that milestone every time new supply hits the market.
