Dogecoin (DOGE 5.08%) is the cryptocurrency trade’s authentic meme token. It was based in 2013 by two mates who used the Doge web meme as inspiration and, in their very own phrases, all the train was a joke.
However those that believed in Dogecoin’s potential had the final snort, as a result of its market capitalization soared to a peak of about $90 billion in 2021. Sadly, a scarcity of any true use case, mixed with a persistently rising provide of tokens, contributed to a 74% decline in Dogecoin’s worth since then.
However the cryptocurrency trade has the wind at its again proper now, as a result of President Donald Trump and his administration have enacted a collection of insurance policies supportive of crytpo. Dogecoin is at the moment buying and selling at about $0.19 per token, so ought to traders scoop it up whereas it is nonetheless beneath $1?
Picture supply: Getty Photographs.
Professional-crypto insurance policies do not actually favor Dogecoin
Whereas on the marketing campaign path final 12 months, Trump vowed to make America the crypto capital of the world. He has already made a collection of personnel appointments and enacted a number of insurance policies to make good on that promise, however they’ve largely benefited bigger cryptocurrencies like Bitcoin (BTC 1.91%) and XRP (XRP 2.21%) to this point.
For instance, the president appointed crypto advocate Paul Atkins to run the Securities and Trade Fee (SEC). Below his management, the company has paused or withdrawn main lawsuits it had initiated in opposition to crypto exchanges like Binance and Coinbase, and in opposition to crypto issuers like XRP creator Ripple.
Dogecoin will not profit a lot from friendlier regulation as a result of it does not have an actual use case. Solely 2,090 retailers are keen to just accept it as fee for items and providers worldwide (in response to crypto listing Cryptwerk), and it is not thought-about to be a authentic retailer of worth due to its rising provide and excessive volatility.
Trump additionally issued an order to determine a strategic Bitcoin reserve, the place the federal government will retailer cash it seized because of prison exercise, which was considered as bullish for the world’s largest cryptocurrency. On the similar time, he ordered the institution of a digital asset stockpile, which can maintain seized cash and tokens apart from Bitcoin, however the authorities does not personal any Dogecoin, so the meme token is unlikely to be included.
Dogecoin’s largest supporter exited the White Home in Could
Tesla Chief Government Officer Elon Musk was a significant drive behind Dogecoin’s meteoric rise a number of years in the past. He has supported the token since 2019 by sharing memes and collaborating in banter with different fans on social media. He even referred to as it his favourite cryptocurrency at one level.
Musk appeared on an episode of Saturday Night time Reside on Could 8, 2021, and nvestors speculated that he would make a grand announcement about Dogecoin through the present. The token subsequently soared to an all-time excessive of $0.74 that day, but it surely plummeted when Musk did nothing however take part in a comedy skit. By mid-2022, it had misplaced greater than 90% of its peak worth as Musk’s affect light.
Dogecoin was largely dormant in 2023 and for many of 2024, till Trump was elected president. Musk was a giant supporter of Trump’s marketing campaign, and the president rapidly appointed him to run the Division of Authorities Effectivity, or DOGE for brief. It was tasked with chopping wasteful spending to assist deliver down the nationwide debt, and traders interpreted the company’s title as a transparent nod of help for Musk’s favourite cryptocurrency.
There was by no means any indication that Dogecoin would play a concrete function in DOGE, but it surely did not cease the meme token from hovering by greater than 300% to a brand new 52-week excessive of $0.47 shortly after Trump’s election win.
Musk’s tenure with DOGE led to Could as a result of he was solely allowed to spend 130 days working as a “particular authorities worker.” He and Trump have since locked horns following a collection of coverage disagreements, so it is unlikely he’ll return in any capability. This might put an finish to any hypothesis that Dogecoin will ultimately discover a use case throughout the authorities.
A rising provide would possibly forestall Dogecoin from reaching $1
Since we have coated Dogecoin’s clear lack of utility, the one query remaining is whether or not one other speculative rally may propel the meme token to new heights. I feel it is unlikely, however not solely as a result of Musk’s affect is slowly fading as soon as once more.
There are 150.1 billion Dogecoin tokens in circulation as of this writing (July 14). There’s a cap on what number of new tokens are added to the overall provide every year, however there isn’t any finish date. In different phrases, new Dogecoin tokens could be “mined” till the tip of time, so provide is virtually infinite.
Any investor who owns Dogecoin is consistently being diluted, which suggests the intrinsic worth of their tokens will steadily decline over time, even when they do nothing however merely maintain them. Personally, I’ve by no means come throughout an asset that appreciates in worth over the long run if it has a endless stream of latest issuance. Bitcoin’s shortage is among the causes it continues to make new highs — its provide is capped at 21 million cash, so as soon as they’re all mined, no extra will enter circulation.
Subsequently, I do not suppose Dogecoin is an effective purchase proper now, and I feel its probabilities of ever reaching $1 are slim. In reality, it turns into more durable and more durable for Dogecoin to achieve that milestone each time new provide hits the market.
