Dogecoin (CRYPTO: DOGE) was created in 2013 by two friends with the purpose of... mocking the cryptocurrency industry. They believed the market was becoming too serious and decided to use the image of the Shiba Inu dog from the famous 'Doge' meme to create the first humorous cryptocurrency.

However, this so-called 'joke' quickly turned into a global craze. In 2021, Dogecoin reached a market capitalization of over 90 billion USD as a slew of investors rushed in, hoping to profit quickly from the cryptocurrency frenzy. But like any other 'bubble', this excitement did not last long. By mid-2022, Dogecoin had lost over 90% of its value compared to its previous peak.

Recovery Thanks to Politics and Elon Musk – But Only Briefly

After struggling for a few years, Dogecoin was once again in the spotlight when Donald Trump won the presidential election last November. He pledged to create an ideal environment for the cryptocurrency industry, with more friendly policies and fewer regulations. The price of Dogecoin surged nearly 200% after the election, reaching a 52-week high of 0.47 USD.

Part of the momentum came from the announcement that Elon Musk would head a new agency called the Department of Government Efficiency (abbreviated as DOGE), aimed at reducing wasteful spending. Although the name evokes Dogecoin, there are no specific plans to integrate or create real value for this currency.

Investor confidence quickly faded. Musk has not taken any action to promote Dogecoin, and the token's price is currently around 0.21 USD – down 55% from its recent peak.

The Biggest Issue: Unlimited Supply

The diminishing influence from Elon Musk is just part of the reason. In reality, Dogecoin still faces more serious issues: lack of real-world application and infinite supply. According to data from Cryptwerk, only about 2,103 businesses worldwide accept Dogecoin as a payment method – a number too modest compared to the scale a cryptocurrency needs to create long-term value.

More concerning, Dogecoin has no total supply limit. Currently, there are about 150.5 billion tokens in circulation, and new tokens are still being mined every year with no end date. This leads to perpetual inflation, diminishing the value of existing tokens and making it difficult for Dogecoin to maintain long-term appeal.

In comparison, Bitcoin – the most popular cryptocurrency in the world – has a limited total supply of 21 million coins. This scarcity gives investors confidence to hold long-term, thereby helping Bitcoin's value to increase over time.

Can Dogecoin Reach 1 USD?

Many investors hope that Dogecoin will one day hit 1 USD, but with its lack of scarcity and limited utility, this scenario is almost impossible. Previous price increases have largely come from temporary excitement rather than solid fundamentals.

Thus, Dogecoin may continue to attract those seeking fun in investing, but for those looking for sustainable growth and long-term value, this is perhaps a currency to stay away from.