Looking for a Dogecoin price prediction can land you in some weird spaces on the Internet. The coin made at least one millionaire as it leaped from $0.05 to $0.50 in a matter of days. His name was Glauber Contessoto, and he is not selling.
In fact, Contessoto believes Dogecoin will ultimately rise to $2.50. That will have brought his Dogecoin position from $180,000 to $10 million.
Our Dogecoin prediction looks a bit different. But let's start by being fair...
Some cryptocurrencies will come and go. Many - most, really - will end up in the pile of obsolete cryptos, or "deadcoins," similar to companies that failed after the dot-com boom.
That could happen even after banking a 1,000% return and burning out, or after not moving at all. Cryptocurrency is a notoriously volatile trade.
The real merit of cryptocurrency comes from its utility. You want its code to prove useful in some real-life purpose.
For example, Ethereum offers smart contracts that keep a permanent record of an agreement between two parties. Or take Chainlink, which acts as a "bridge" between real-world data and the blockchain, enabling more use cases for other cryptos. This is what is meant by "utility" in the crypto world.
And while limited, Dogecoin does have some utility.
What Is Dogecoin Good For?
Dismissing Dogecoin as a joke might be an unfair summation, because its value comes expressly from the fact that it was made as a joke.
Sure, the joke is what keeps it viral, and the virality is what keeps it valuable. But more than that, the fact that it was created as a joke means its design is not all that complex.
The coin is little more than a name, a label, a trademark. And, sometimes, this is good.
As an analogy, compare Bitcoin to gold and DOGE to paper bills. Chances are, you've never bought anything from Walmart with a gold brick. You used paper, because it's easier to carry and hand off to someone. The downside is probably that paper is easier to lose and less secure.
Dogecoin is similar in its transactability relative to Bitcoin. Transactions get confirmed faster than Bitcoin or Ethereum. The "block time," or the time it takes to produce a new block on the blockchain is under 1 minute, significantly less than Bitcoin's 10 minutes.
This means Dogecoin is cheaper and more energy efficient than Bitcoin, which is probably why it's been widely used to tip people on the web.
However, it's not super unique.
There is plenty of currency-in-name-only out there, with over 1,600 cryptos to choose from. As a result, Dogecoin's top-dog status will likely be short-lived.
Why the Dogecoin Price Is Going to Zero
It's understandable why people would take DOGE more seriously after it soared 1,400% earlier this year. At that peak, DOGE was among the top cryptocurrencies by market cap.
And who can hate a dog-themed coin, besides maybe cat lovers?
The coin went viral quickly as a group of Reddit traders rallied to get DOGE to $1. Since getting to about $0.69, it's now back under $0.50. But DOGE lovers still hold out hope.
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Our answer to whether Dogecoin is a buy today, however, remains a hard "no."
Money Morning's Dave Zeiler recalls the "meme stock" craze early in 2021, when Internet forums sought to pump GameStop, AMC, and others with excess short interest. It was a way for Robinhood traders to stick it to bearish hedge funds.
The virality of GameStop spiked it more than 1,800% from $17 to $325.
What helped was how shorted the stock was. Institutional investors who were "short" GameStop now had to buy their stock back at a much higher price than before. Because there were so many instances of this, money flooded into the stock, and the price ballooned.
There exists a similar "meme coin" effect with DOGE as well, a viral trend pumping its price.
But it would be a mistake to think the GameStop trend was propelled by hype alone. The trend was paired with a hefty sum of institutional money.
DOGE, on the other hand, has no short interest. It's only a wave of enthusiasm.
What's more, the Dogecoin supply is not capped, meaning it's not deflationary. Scarcity is not programmed into it like Bitcoin, which has a cap of 21 million coins.
Instead, infinite Dogecoins can be mined. And miners have already created 128 billion DOGE. Every new DOGE mined makes it more difficult to pump the price to that infamous $1 mark.
Lastly, the Dogecoin creator, Billy Markus, doesn't seem to believe in his own coin. When it was priced at just $0.08, he was surprised and said it "doesn't make any sense. He called it "the same as GameStop being worth $325."
No, GameStop at $325 did not make much fundamental sense either, so it went back down. However, the short squeeze helps make a little more sense of why it rose.
Dogecoin, on the other hand, went up for no good reason, which was good enough reason for its retreat back to $0.50, and probably why it will land on zero (or close to zero) in the end.
Of course, that doesn't mean you won't see a massive spike or two between now and then.
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Why the Dogecoin Price Is Going Up at All
One thing Dogecoin has going for it, and a reason it's come out so strong, is its large community of believers. The DOGE community is entirely responsible for the massive gains.
But the risk here is that eventually people will get bored with it and stop trying to push the price higher.
Nothing else in the history of Dogecoin suggests this cryptocurrency will have staying power.
DOGE was designed as a satire of cryptocurrency in 2013 by Adobe project manager Jackson Palmer and IBM software developer Billy Markus.
It soon became a great meme, using a popular photo of the Japanese Shibu Inu dog as the logo. The coin got some attention for its humor before escaping the mainstream consciousness for a while. But it managed to keep a handful of traders and even got some new developers volunteering to keep its code running.
An April Fool's poll in 2019 brought Dogecoin back to life when Elon Musk was voted the CEO of Dogecoin. Of course, this was not a legitimate position, as the currency is decentralized. Still, Musk embraced the title on his Twitter, pumping the price 94% in the five days that followed.
Hence, today, as Bitcoin miners require "proof of work" to validate transactions, DOGE traders will joke about requiring "proof of Musk."
People continue to reach for a $1 Dogecoin, running all kinds of Internet campaigns over Twitter and TikTok. But, again, there is ultimately nothing to stabilize the price once it goes viral. If it's headed downward, nothing will stop it from going all the way.
Ultimately, when you buy Dogecoin, you're buying a joke. And it's a joke that only half the world understands. The rest prefer cats - in fact, you might be better off buying a Cryptocat NFT.
But the most prudent crypto-investor ultimately looks for a solid use-case. Bitcoin and Ethereum can provide you with that for now.
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About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.