Dogecoin has risen more than 370% so far in 2024.
In the world of cryptocurrency, most investors are talking about the same thing: Whether or not Bitcoin will pass and sustain a price over $100,000 soon. As of this writing, Bitcoin’s price is hovering around $98,000 — putting its newest milestone mere inches away.
In the background, another crypto has experienced a surge of its own. Enter Dogecoin (DOGE -4.58%), whose price has skyrocketed by 376% in 2024. At a price of roughly $0.43, can Dogecoin’s momentum continue and propel the token to a price of $1 by the end of the year?
Let’s take a look at what is fueling Dogecoin’s price rise, and assess whether now is a good time to get in on the action.
Taking a look at Dogecoin’s price action
A lot can be gathered from the chart below. The first obvious takeaway is that for much of Dogecoin’s existence, the crypto was essentially worthless. For years, the price of Dogecoin was below a penny. Then, in 2021, something happened that fueled the price of Dogecoin to nearly $0.70.
Dogecoin Price data by YCharts.
Unlike mainstream cryptocurrencies such as Bitcoin or Ethereum, Dogecoin is classified as a meme coin. Essentially, Dogecoin doesn’t have much utility in the real world as a widely accepted means of payment. Instead, its underlying “value” is more or less determined by internet-driven hype — namely, viral memes.
In 2021, Dogecoin was propelled into the spotlight after Elon Musk started frequently posting about the crypto on social media and even referenced it during his dedicated episode on Saturday Night Live.
In other words, Dogecoin experienced an outsized level of interest thanks to Musk’s influence and facetious “endorsement” of the cryptocurrency.
What could fuel Dogecoin to $1?
As the chart above clearly shows, Dogecoin’s ascent in 2021 was short-lived. Over the last few years, the price of Dogecoin has hovered around $0.10 — and even with its near-400% return so far in 2024, the crypto is still far off from prior highs. Nevertheless, there could be some catalysts that could fuel Dogecoin past its prior high, and even possibly make it reach a milestone price of $1 in the near term.
The first catalyst that could benefit Dogecoin is a Santa Claus rally. Although the Santa Claus rally is more of a psychological phenomenon, the broader idea here is that trading activity can sometimes experience notable upticks toward the end of the year as people invest holiday bonuses. They may also simply have an optimistic outlook for the market in the coming year and want to take advantage before January comes around.
In order for Dogecoin to really benefit from a Santa Claus rally, I think the broader crypto landscape will have to see some rising interest. I think there’s a real possibility of that happening, which leads to my second point.
President-elect Trump was an avid supporter of Bitcoin during his time on the campaign trail. While that doesn’t have much of anything to do with Dogecoin, I think some investors could interpret the support for Bitcoin as a positive indicator for the crypto landscape in general.
Expanding upon the idea above, keep in mind that Trump is looking to create a new organization in his administration focused on identifying wasteful or redundant spend in the federal budget to help reduce the U.S. deficit. The name of that organization is the Department of Government Efficiency (D.O.G.E.), and it’s set to be co-led by none other than Elon Musk.
I wouldn’t be too shocked to see the prices of other cryptocurrencies beyond Bitcoin start to witness some heightened volatility as Trump’s inauguration gets closer and the creation of D.O.G.E. becomes more of a reality.
Image source: Getty Images.
Should you invest in Dogecoin right now?
In a way, I can’t help but find some humor in Dogecoin’s rising price. Be it 2021 or 2024, the value of the coin is largely tied to Musk. Yet despite the irony here, there are some serious points I need to make.
First, it’s quite clear that Dogecoin doesn’t have any actual value. Its price is determined by meme-driven narratives and online jokes.
Telling someone to invest in Dogecoin because Elon Musk thinks the idea of it is funny is like telling someone to buy stock in Nike because a big-name celebrity wore its shoes out in public one day. Even if a popular celebrity was spotted wearing Nike’s shoes at an event, nothing has actually changed about the underlying fundamentals of the business. At best, these ideas are tangentially related — yet these affiliations create a sense of perceived value.
The second important point to make is that Dogecoin is an inflationary token. This means that there is not a cap on the supply of tokens that can enter circulation. In essence, it’s going to take an unprecedented level of demand to push Dogecoin’s value higher, since its supply circulation is constantly increasing.
While a Santa Claus rally and the upcoming inauguration could represent some near-term tailwinds for the price of Dogecoin, it’s critical that investors understand that neither of these things has anything to do with the token in a direct sense.
Even if the price of Dogecoin somehow manages to reach $1 by the end of the year, it’s clear that such a movement is rooted in anything but sound judgement or underlying fundamentals. I see an investment in Dogecoin as incredibly risky and would pass on it.