Is It Possible for Dogecoin to Reach a Value of $1?
Dogecoin (DOGE 3.00%) is making a remarkable return. On Oct. 31, the speculative cryptocurrency was traded 75% below its all-time high in May 2021. However, since the start of November, it has seen a substantial surge, approximately 150%, as investment enthusiasm grows.
As of the late afternoon of Dec. 17, this humorously named token is trading at $0.40. But could it increase another 150% to eventually hit a new high of $1? Continue reading to explore Dogecoin's possible price trends.
Rising speculative action
The stock market has thrived following the presidential election, along with the broader cryptocurrency market. Even the highly speculative Dogecoin has managed to climb higher.
This development illustrates the most compelling bullish argument for Dogecoin, which is known as the "greater fool" theory. The idea is to purchase an asset not because it has intrinsic value, but because you can later sell it to someone less informed at a higher price. This high-risk strategy relies on unwavering hype for the asset you're buying.
It's beneficial that Tesla CEO Elon Musk, who attracts a lot of attention and happens to have Donald Trump's ear, is supportive of Dogecoin. Add to this the fact that President-elect Donald Trump has mentioned putting Musk in charge of the nonexistent Department of Government Efficiency (DOGE), and the speculation about Dogecoin might well intensify.
Lack of competitive advantages
It's easy to have a bearish view on Dogecoin. The reason is that the digital asset lacks any notable competitive advantages.
Launched in 2013 as a light-hearted alternative to Bitcoin, Dogecoin uses a "proof-of-work" consensus protocol. DOGE tokens can be used to send and receive money. But 10,000 new Dogecoin tokens are produced every minute with no maximum supply, and there are already 147 billion coins in circulation.
On the other hand, Bitcoin has a maximum supply cap of 21 million coins. Moreover, as the world's first and most valuable cryptocurrency, with a $2.1 trillion market cap, Bitcoin boasts huge scale, "network effects", and a broad and expanding financial ecosystem that puts it far ahead of Dogecoin.
The number of developers working on a project can be an indicator of its potential. It's a positive sign if there are intelligent computer scientists working to improve utility and adoption. However, according to venture firm Electric Capital, Dogecoin isn't one of the top 100 blockchain networks in terms of developer activity. That's not an encouraging sign.
Dogecoin is a gamble
I'm not a fan of Dogecoin because I believe its main disadvantage is that it lacks any substantial competitive advantages. And this argument could become more popular, causing the market to view it as worthless.
However, I can see how much speculation among investors matters. And this could continue to support Dogecoin's price for the time being.
As a result, I wouldn't be surprised if Dogecoin continues to have unexpected surges, like the one it's currently experiencing, eventually reaching the $1 mark. But such surges will be unpredictable, as they're not based on any fundamental factors.
And if the coin does reach $1, it will likely see a significant decline not long after. Investing in this crypto is nothing more than a gamble, so I think the best move for long-term investors is to avoid it.
Investors seeking to capitalize on this surge might consider expanding their finance portfolio to include Dogecoin, given its recent performance and growing investment enthusiasm. However, it's important to note that Dogecoin's potential success primarily relies on speculative actions and market sentiment, rather than any significant competitive advantages or intrinsic value.
