We’ve all seen this movie before. The cryptocurrency market, once down and out, is now a favorite among investors. The entire asset class is worth $2.5 trillion today, up roughly 200% from the start of 2023.
Dogecoin (CRYPTO: DOGE), one of the most speculative digital tokens on the market, has benefited immensely. Its price has increased by 80% in the last month alone.
This dog-inspired meme cryptocurrency has cooled somewhat as it sits about 17% below its 2024 peak (as of March 21). But that didn’t stop some of the most Dogecoin bull supporters from the hope that the token can reach $1 in the next few years. Could this cryptocurrency jump almost 600% between now and the end of 2030?
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Dogecoin’s previous all-time high was achieved in May 2021, when the token reached a price of just under $0.74. During this raging bull market, even stock market investors registered strong excitement as the so-called meme stock madness took over. This has also spread to the cryptocurrency market.
Dogecoin benefits from various hype cycles that cause its price to soar in short periods of time. Whether it is a public mention by Tesla founder and CEO Elon Musk or Mark Cuban’s announcement that the NBA’s Dallas Mavericks are accepting Dogecoin as a payment method, investors are quick to drive up the price. That is, until optimism quickly fades.
This helps explain why, despite its rally this year, Dogecoin is still about 80% below its peak price. It is worth noting that since the beginning of 2023, this token has significantly underperformed the broader crypto market. One of the most speculative digital assets is likely to fall out of favor, at least compared to a few years ago. This trend does not bode well for its future price performance.
How about the basics?
I think the only way Dogecoin can reach $1 in the next six or so years is if it gains status as a popular portfolio addition in the same way that Bitcoin there is. Dogecoin, which is not much younger than the most valuable cryptocurrency in the world, was created as a joke to imitate Bitcoin as a payment network running on proof of work system.
The difference in their trajectories over the past decade is that Bitcoin has become a legitimate financial asset and store of value, especially in the eyes of Washington regulators and Wall Street asset managers. The approval by the Securities and Exchange Commission (SEC) of Bitcoin Spot Exchange Traded Funds is a case in point. Much of the capital will continue to flow to Bitcoin.
There is another key difference between Bitcoin and Dogecoin that cannot be overlooked. The former is well known to have a fixed supply cap of 21 million, a level of scarcity that helps its appeal to investors.
The latter, on the other hand, was created by its founders to be deliberately abundant. There are currently 144 billion Dogecoin tokens in circulation, a figure that is increasing by 10,000 every minute. For the price of Dogecoin to rise, demand must outpace the growing supply. This is a tall order.
In my view, then, there are no fundamental reasons to be long-term bullish on Dogecoin. In fact, it is highly unlikely that the token will grow by 600% to reach $1 by 2030.
If you are interested in buying Dogecoin for any reason, I believe it would be nothing more than a speculative decision. Not a smart move with your hard earned savings.
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Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.
Can Dogecoin Reach $1 By 2030? was originally published by The Motley Fool