Created as a joke, Dogecoin does not have any technical benefits over different cryptocurrencies.
A lot of its success has been as a consequence of Elon Musk.
It is underperforming the crypto market this 12 months.
(*5*)
5 years in the past, Dogecoin (CRYPTO: DOGE) was a considerably profitable meme coin, however not precisely a family title. Since then, it surged to an all-time excessive in 2021 and went on one other spectacular run after the 2024 presidential election. It is now one of many 10 largest cryptocurrencies by market cap, and it is undoubtedly a family title — even my grandmother is aware of what Dogecoin is.
The crypto market as a complete has been doing properly this 12 months, and traders are excited in regards to the future. Let’s take a more in-depth have a look at Dogecoin to see if it is prone to be a winner through the subsequent 5 years.
Picture supply: Getty Photographs.
Launched in 2013, Dogecoin is among the oldest cryptocurrencies, and it is notable for being the primary meme coin. Software program engineers Billy Markus and Jackson Palmer needed to poke enjoyable on the lofty ambitions of different cryptocurrencies and determined to make their very own. The doge meme was in style on the time, so that they used that because the title and the brand.
There’s nothing outstanding about Dogecoin as a cryptocurrency. Transactions are inexpensive, with charges usually costing lower than $0.10, however loads of different cryptocurrencies have sub-$0.01 transaction charges. Transaction processing occasions are about 5 to 10 minutes, and Dogecoin’s blockchain can handle about 30 transactions per second. Not unhealthy for its time, however newer cryptocurrencies deal with a lot increased workloads and settle transactions in a matter of seconds.
Dogecoin’s function was by no means to be the quickest cryptocurrency or discover new makes use of for blockchain expertise. Its purpose was to be amusing. There’s nothing improper with that, however it means Dogecoin does not have any aggressive benefits that make it stand out in a crowded crypto market.
To its credit score, Dogecoin has completed properly at constructing a following. Considered one of its backers, in specific, has been instrumental in its stand up the crypto charts.
Tesla (NASDAQ: TSLA) Chief Government Officer Elon Musk is a longtime fan of Dogecoin. He first talked about it in 2019, writing on X (previously Twitter) that Dogecoin is perhaps his favourite cryptocurrency.
Musk has additionally performed a job in the meme coin’s largest moments. The value went up a number of occasions in 2020 and 2021 after tweets by Musk, and Dogecoin’s all-time excessive coincided with Musk’s look on Saturday Evening Stay. Dogecoin’s bull run final 12 months occurred proper after Donald Trump received the presidential election, and made Musk the pinnacle of the brand new Division of Authorities Effectivity (DOGE), though there was no connection between the crypto and the company.
It isn’t an excellent signal {that a} single individual has such an outsized influence on Dogecoin’s value. It reinforces that there is not any elementary foundation for this crypto’s earlier value appreciation.
Additionally value mentioning is that these earlier moments of success have been temporary. After reaching its all-time excessive of $0.74 on Could 8, 2021, Dogecoin misplaced 70% of its worth in lower than two weeks. It hit a peak of $0.48 final 12 months on Dec. 8, and whereas it held on longer this time, it nonetheless declined by greater than 60% through the subsequent three months.
Dogecoin has underperformed currently, shedding greater than 28% of its worth on the 12 months (as of Aug. 16). That is much more regarding when you think about that many cryptocurrencies have been on a tear.
The chart exhibits how Dogecoin’s efficiency compares to 4 different top cryptocurrencies: Bitcoin, Ethereum, XRP, and Solana.
It hasn’t been all unhealthy. Dogecoin remains to be value greater than twice as a lot because it was a 12 months in the past. As well as, most economists expect the Federal Reserve to chop rates of interest a number of occasions earlier than the top of the 12 months. Decrease rates of interest usually drive extra funding in cryptocurrency, which may very well be helpful for Dogecoin.
However there’s nothing to recommend Dogecoin is an efficient long-term funding. It is solely value shopping for if you happen to like the concept of proudly owning a meme coin, and solely with cash you’ll be able to afford to lose. My private prediction is that Dogecoin loses about 50% of its worth through the subsequent 5 years as traders flock to extra helpful crypto investments.
Before you purchase inventory in Dogecoin, think about this:
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Lyle Daly has positions in Bitcoin, Ethereum, Solana, and Tesla. The Motley Idiot has positions in and recommends Bitcoin, Ethereum, Solana, Tesla, and XRP. The Motley Idiot has a disclosure policy.
