Dogecoin is the first meme token in the cryptocurrency industry. It was established in 2013 by two friends inspired by the Doge meme on the internet, and according to them, the whole idea was just a joke.
But those who believe in Dogecoin's potential had the last laugh, as the market capitalization of the coin surged to a peak of around $90 billion in 2021. Unfortunately, the lack of any real use cases, combined with the increasing token supply, has contributed to Dogecoin's value dropping 74% since then.
But the cryptocurrency industry currently has the upper hand, as President Donald Trump and his administration have enacted a series of pro-crypto policies. Dogecoin is currently trading at around $0.19 per token, so should investors buy in while the price is still below $1?
Pro-Crypto Policies Do Not Really Benefit Dogecoin
In last year's election campaign, Trump promised to make America the cryptocurrency capital of the world. He appointed a series of personnel and issued several policies to fulfill that promise, but so far, these policies have primarily benefited larger cryptocurrencies like Bitcoin (CRYPTO: BTC) and XRP (CRYPTO: XRP).
For example, the president has appointed cryptocurrency expert Paul Atkins as the head of the Securities and Exchange Commission (SEC). Under his leadership, the agency has paused or withdrawn major lawsuits that they had filed against cryptocurrency exchanges like Binance and Coinbase, as well as against cryptocurrency issuers like Ripple, the company behind XRP.
Dogecoin will not benefit much from more friendly regulations because it has no real-world application. Only 2,090 units accept Dogecoin as a method of payment for goods and services worldwide (according to the cryptocurrency directory Cryptwerk), and it is not considered a legitimate store of value due to the increasing supply and extreme volatility.
Trump has also issued an order to establish a strategic Bitcoin reserve fund, where the government will store coins seized due to criminal activity, seen as a positive signal for the largest cryptocurrency in the world. At the same time, he ordered the establishment of a digital asset reserve that will hold coins and tokens seized besides Bitcoin, but the government does not own any Dogecoin, making it unlikely for this meme token to be included.
Dogecoin's Biggest Supporter Left the White House in May
Tesla CEO Elon Musk was the main driving force behind Dogecoin's meteoric rise a few years ago. He has been an advocate for the coin since 2019 by sharing memes and engaging in conversations with other enthusiasts on social media. At one point, he even called Dogecoin his favorite cryptocurrency.
Musk appeared on an episode of Saturday Night Live on May 8, 2021, and investors speculated that he would have a major announcement about Dogecoin during the show. The coin then skyrocketed to an all-time high of $0.74 that day, but fell sharply when Musk only participated in a skit. By mid-2022, the value of Dogecoin had lost over 90% from its peak as Musk's influence waned.
Dogecoin has been relatively quiet in 2023 and for most of 2024, until Trump is elected president. Musk is a staunch supporter of Trump's election campaign, and the president quickly appointed him to run the Office of Government Efficiency, or DOGE for short. This agency is tasked with cutting wasteful spending to help reduce the national debt, and investors understand the name of this agency as a clear endorsement of Musk's favorite cryptocurrency.
There has never been any indication that Dogecoin would play a specific role in DOGE, but that did not stop this meme token from surging over 300% to a 52-week high of $0.47 immediately after Trump's election victory.
Musk's tenure at DOGE ended in May as he was only allowed to work for 130 days as a 'special government employee.' Since then, he and Trump have disagreed after a series of policy differences, so the likelihood of him returning in any capacity is very low. This may put an end to any speculation that Dogecoin would eventually be used in government.
Increasing Supply Could Prevent Dogecoin From Reaching $1
As we have mentioned the apparent lack of utility of Dogecoin, the only remaining question is whether another speculative rally could propel this virtual currency to new heights. I think that is unlikely, but not just because Musk's influence is gradually fading.
As of the time of this writing (July 14), there are 150.1 billion Dogecoin tokens in circulation. The number of new tokens added to the total supply each year is limited, but there is no end date. In other words, new Dogecoin tokens can be 'mined' indefinitely, so the supply is virtually limitless.
Any investor holding Dogecoin is continuously being diluted, meaning the intrinsic value of the token will gradually decrease over time, even if they do nothing but hold it. Personally, I have never seen an asset increase in value over the long term if it has a continuous stream of new releases.
The scarcity of Bitcoin is one reason it continues to reach new highs -- its supply is capped at 21 million coins, so once all are mined, no more coins will be introduced into circulation.
Therefore, I do not think Dogecoin is a coin worth buying at this time, and I think the chances of it reaching the $1 mark are very low. In fact, Dogecoin becomes increasingly difficult to reach that milestone each time new supply enters the market.
