Dogecoin (CRYPTO: DOGE) is a novelty token that was created in 2013 as a joke. Nonetheless, it has delivered a whopping 350% return this year, so investors are laughing all the way to the bank. President-elect Donald Trump and his mega-supporter Elon Musk are responsible for a big chunk of that rally, and I'll explain why in a moment.
Momentum is on Dogecoin's side as we head into the new year, so will it be a better buy than Bitcoin in 2025?
A happy Shiba Inu dog standing in a garden.
Image source: Getty Images.
The Trump-Musk effect
Musk's influence over Dogecoin dates back to 2021. Throughout that year, he called Dogecoin his favorite cryptocurrency, promoted it regularly on social media, and he even appeared in a Dogecoin-themed comedy skit on Saturday Night Live (SNL) on May 8 that year.
Dogecoin started 2021 at a price of $0.0046, and during the next five months, it soared 15,769% to a record high of $0.73. That peak was set on the night of Musk's SNL appearance, but once investors realized he didn't have a real plan to back up his verbal support, Dogecoin plunged. By mid-2022, it had lost 92% of its value.
The token flatlined during 2023 and 2024, and it was even trading near its 52-week low as recently as September. However, when Trump won the election for the presidency on Nov. 5, Dogecoin took off like a rocket (along with most other cryptocurrencies). Speculators believe the Trump administration will approach the crypto industry with a light regulatory touch, paving the way for more use cases to support its value.
Musk was one of the biggest supporters of Trump's campaign. As a result, Trump recently appointed Musk as the head of a new entity called the "Department of Government Efficiency," or DOGE for short. That's a clear reference to Musk's favorite cryptocurrency, which added even more fuel to Dogecoin's rally -- even though there is no suggestion the token will play a role in the new department.
