The website CoinGecko tracks nearly 17,000 different cryptocurrencies, and last week, their combined value topped $4 trillion for the first time ever. Bitcoin alone accounts for $2.4 trillion of that value, and it continues to march to new highs, but even some of the most speculative meme tokens are participating in the recent rally.
Dogecoin (DOGE -3.56%) and Shiba Inu (SHIB -1.09%) have soared by 73% and 37%, respectively, during the past month. President Donald Trump's pro-crypto agenda continues to pick up steam, which is driving demand for coins and tokens from all corners of the industry.
Last week, Congress passed the Genius Act, which lays out a new regulatory framework for stablecoins. And then there is the Clarity Act, which would shift crypto regulation from the Securities and Exchange Commission to the smaller Commodity Futures Trading Commission if it wins enough votes in the Senate.
Can Dogecoin and Shiba Inu convert this sugar high from Washington into sustainable upside, and if so, which one is the better buy for the long term? Read on for the surprising answer.
Image source: Getty Images.
The case for Dogecoin
In 2013, two friends named Billy Markus and Jackson Palmer believed the cryptocurrency industry was taking itself too seriously. Inspired by the popular Doge meme -- featuring a Shiba Inu dog -- that was spreading across the internet at the time, they launched Dogecoin. The entire exercise was a joke (in their own words), but that didn't stop their creation from reaching a peak market capitalization of about $90 billion in 2021.
The coin's ascension was a community effort, but one person had more influence over its performance than any other: Tesla Chief Executive Officer Elon Musk. He started publicly supporting the meme token in 2019 and consistently promoted it with amusing posts on social media in the years that followed.
On May 8, 2021, Musk participated in a Dogecoin-themed comedy sketch during an episode of Saturday Night Live. The token surged to a record high of $0.73 that night, but when investors realized Musk had no plan to create concrete value, they abandoned ship.
Dogecoin lost more than 90% of its value by mid-2022, and it remained dormant in 2023 and for most of 2024 -- until Trump was elected president in November.
Musk was a big supporter of Trump's campaign, and once elected, the president appointed him to run an external agency called the Department of Government Efficiency, which is tasked with reducing wasteful spending to address the national debt. The agency's name shortens to DOGE, which caused Dogecoin to more than triple in value to a new 52-week high of $0.47 on speculation that Musk might have a new plan for his favorite cryptocurrency.
Its momentum faded when it became clear that Dogecoin would play no role in the agency. Despite its 73% gain during the past month, the token currently trades at just $0.28.
If the Clarity Act creates a friendlier regulatory environment for all cryptocurrencies, as expected, it might pave the way for new uses for meme tokens like Dogecoin. Any development that drives sustainable adoption could send it soaring, but it's unclear whether that will actually happen.
The case for Shiba Inu
Shiba Inu is another popular meme token, but it did something in 2021 that no other financial asset -- let alone a cryptocurrency -- has ever done: It generated an annual return of 45,278,000% that year, which would have been enough to turn a perfectly timed investment of just $3 into over $1 million.
An anonymous developer named Ryoshi created Shiba Inu in late 2020 to ride the same speculative wave that was driving Dogecoin higher. It was actually dubbed the "Dogecoin killer" by investors who were optimistic it could overtake its older rival in popularity.
Shiba Inu didn't have an influential figure like Elon Musk in its corner, but its rapidly rising value prompted a flurry of top exchanges like Coinbase and Binance to add it to their platforms, which made it accessible to troves of new investors.
Then, like Dogecoin, Shiba Inu lost more than 90% of its peak value once the hype wore off in 2022. It still hasn't found a legitimate use in the real world, so most recovery attempts have faltered. It's too volatile for businesses to accept as payment for products and services, and it certainly isn't a good store of value since it's still trading 83% below its record high.
Moreover, Shiba Inu has a supply problem. There are 589.2 trillion tokens in circulation, which is why it trades at a tiny price per token of $0.000015. If it were to rise to $1 per token, for example, it would result in a market capitalization of $589.2 trillion, which would make it the most valuable asset in the entire world by a wide margin.
At that level, Shiba Inu would be worth roughly 19 times more than the annual output of the entire U.S. economy, which was $29.7 trillion last year.
There is no obvious catalyst that could spark another historic rally in Shiba Inu, but like Dogecoin, it could benefit from any deregulatory efforts that pave the way for new uses.
The surprising verdict
Shiba Inu's enormous circulating supply is very slowly shrinking as some investors are voluntarily burning the coins. Dogecoin, on the other hand, has a potentially infinite supply -- a capped amount of new tokens are mined each year, but there is no end date, which means existing investors will be diluted until the end of time.
For that reason, if I had to invest in one of these meme tokens, I would probably pick Shiba Inu.
However, I would actually recommend that investors avoid both of them. The fact that neither of them have reclaimed their all-time highs from 2021 highlights the pitfalls of investing in speculative assets. With no concrete fundamentals to support the value of Dogecoin or Shiba Inu, not only is a recovery unlikely, but they will probably trend lower over the long term. Investors who want some exposure to cryptocurrencies should probably consider an industry leader like Bitcoin instead.
