Should You Consider Investing in Dogecoin Below $1?
In the final month of 2024, the S&P 500 stocks have climbed an impressive 29%, nearly tripling their typical annual average gain. However, the cryptocurrency market is surpassing the stock market, thanks to President-elect Donald Trump's election win on Nov. 5. Bitcoin is up an impressive 120% for the year, but the true standout performer is Dogecoin, soaring an astounding 375%. Currently trading at $0.44 per token, some crypto analysts believe it could hit $1.
The cryptocurrency community has high hopes for a pro-crypto Trump administration, and Trump's election win was bolstered in part by Tesla CEO Elon Musk's support. Musk, who once called Dogecoin his favorite cryptocurrency, was appointed to lead a new government agency called the "Department of Government Efficiency," or DOGE for short. The acronym is a nod to Dogecoin, and while the token doesn't appear to have a role in the agency, speculators have sent the price of Dogecoin soaring regardless.
However, it's important to note that while Dogecoin's performance in 2024 has been influenced by Trump's crypto-friendly stance and Musk's involvement, it still lacks real fundamentals. Although Dogecoin opened 2021 at a price of $0.0046, it soared 15,769% within five months, reaching a record high of $0.73. Musk was a significant proponent of the token's rally, regularly promoting it on social media and during his appearance on Saturday Night Live.
However, the move was primarily driven by 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 prevent a steep 92% decline by mid-2022. Simply put, CRYPTOCURRENCIES like Dogecoin can't maintain their value without being seen as stores of value like Bitcoin or being used in transactions. Dogecoin has yet to reclaim its 2021 high, and only 2,503 merchants accept the token as payment worldwide, according to Cryptwerk.
Therefore, while it's possible for Dogecoin to reach $1, it's unlikely to sustain its value over the long term. Based on its current price of $0.44 and a total supply of 147.1 billion tokens, Dogecoin currently has a market capitalization of $64 billion. At $1 per token, its market cap would be $147.1 billion, which is not entirely impossible, considering Bitcoin now has a market cap of $2 trillion. However, unlike Bitcoin, Dogecoin has no fixed supply and can be technically minted indefinitely. Plus, the SEC has approved dozens of Bitcoin exchange-traded funds this year, giving investors a safer, regulated way to invest in the cryptocurrency.
In conclusion, while Trump's crypto-friendly stance and Musk's involvement have contributed to a bullish sentiment towards Dogecoin, the token's true value remains uncertain. Speculators should be cautious and consider the risks involved in investing in Dogecoin, as its long-term sustainability remains questionable.
Investors looking to capitalize on the crypto market might consider diversifying their portfolio by investing in Dogecoin, given its impressive growth in 2024. However, it's crucial to note that funding such investments comes from the finance sector, where money is allocated based on market trends and investment strategies.
