Dogecoin (DOGE -9.94%) had a spectacular year in 2024 with a gain of 250%. It outperformed many other popular cryptocurrencies, including XRP (Ripple), Bitcoin, and Ethereum.
Dogecoin Price data by YCharts.
As you can see, most of those cryptocurrencies didn't take off until around November. That's when Donald Trump won the U.S. presidential election, after running a crypto-friendly campaign.
Cryptocurrency investors are now preparing for a much friendlier regulatory environment, which could pave the way for new use cases and more opportunities to create value across the industry. Dogecoin investors also received another positive surprise following Trump's win, and it involves Tesla CEO Elon Musk. Will it be enough to drive it to a price-per-token of $1 this year?
Musk is one of Dogecoin's biggest supporters
Musk was a big promoter of Dogecoin back in 2021. He regularly posted about it on social media, and even appeared in a Dogecoin-themed skit on Saturday Night Live in May of that year. Unfortunately, the lack of tangible value-creating plans for the cryptocurrency quickly became apparent to investors.
Dogecoin was trading at $0.0046 per token at the beginning of 2021, and it reached an all-time peak of $0.73 on the night of Musk's appearance on SNL just five months later. That represented a whopping 15,769% gain, but investors who bought in late were left licking their wounds as the cryptocurrency then plunged by more than 90% through mid-2022.
Dogecoin showed little activity in 2023 and for the most part of 2024, remaining quiet until the election. Trump was something of a crypto advocate on the campaign trail, throwing his support behind radical ideas such as establishing a Bitcoin reserve within the U.S. government. Therefore, it came as no surprise that investors responded to his election win by rushing to buy cryptocurrencies across the board.
Musk put his cash and influence behind Trump's campaign, so his pending return to the White House has rekindled significant enthusiasm for Dogecoin in particular. That enthusiasm hit a fever-pitch after Trump announced that Musk and his fellow billionaire Vivek Ramaswamy will lead an initiative he has dubbed the "Department of Government Efficiency," or DOGE for short. Yes, the acronym could be a reference to Musk's favorite cryptocurrency.
Dogecoin promptly soared to a 52-week high of $0.47, but since there was no concrete plan connecting the token to DOGE -- which will not actually be a U.S. government department, as cabinet agencies can only be created by Congress -- the rally feels like déjà vu. Plus, its recent high is still well below its all-time peak, which suggests that investors may be feeling more cautious this time around.
Dogecoin lacks real fundamentals
This is probably an appropriate time to remind readers that Dogecoin's founders created it as a joke in 2013. Even they are surprised by its incredible price gains, probably because it still doesn't have any utility in the real world.
According to Cryptwerk, just 2,315 businesses around the world are willing to accept Dogecoin as payment, and many of them are obscure providers of crypto services, providers of internet services, and online gambling houses. In other words, Dogecoin's price mostly moves up and down based on the whims of speculative investors, not due to organic demand.
To be fair, no cryptocurrencies have achieved mainstream adoption among consumers or businesses yet. However, Bitcoin continues to climb to new highs because investors view it as a good store of value, kind of like a digital version of gold since its maximum supply is capped.
Dogecoin lacks those attractive features. Although the issuance of new tokens is limited each year, more of them can be mined over an indefinite period of time. Technically, that makes its supply unlimited, which means Dogecoin will probably never be a good store of value.
Image source: Getty Images.
Dogecoin could reach $1, but don't expect it to stay there
Accurately predicting when the end of a speculative rally might arrive is essentially impossible. There's no telling where Dogecoin's price will land once this latest surge is over. It's trading at $0.38 per token as of this writing, so could it soar by 163% to reach $1 this year? It's entirely possible.
Trump has already nominated pro-crypto businessman Paul Atkins to run the Securities and Exchange Commission (pending Senate approval), which means the crypto industry will likely face a much friendlier regulatory environment than it has for the last four years under SEC Chairman Gary Gensler. That doesn't guarantee Dogecoin enthusiasts will invent a valuable new use case for it, but it could drive bullish sentiment for the meme token to new heights.
With a market capitalization of $56 billion as of this writing, Dogecoin is the seventh-largest cryptocurrency in the world. If it rose to a price of $1 per token, its market cap would be around $147 billion, which would still be a small fraction of Bitcoin's current $1.9 trillion valuation.
That's why I think it's possible (though not probable) that a powerful speculative frenzy could drive Dogecoin to new heights this year. But investors should brace themselves for history to repeat: Once this speculative fever wears off, Dogecoin could again plunge by a substantial amount. Because it lacks both solid fundamentals and organic demand, there is nothing supporting its value over the long term.
