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 more speculative digital tokens out there, is benefiting tremendously. Its price is up 80% just in the past month.
This dog-inspired meme cryptocurrency has cooled off somewhat, as it sits about 17% below its 2024 high (as of March 21). But that hasn’t prevented some of Dogecoin’s most bullish supporters from hoping the token can reach $1 during the next several years. Is it possible for this crypto to soar almost 600% between now and the end of 2030?
It’s all about hype
Dogecoin’s previous all-time high was achieved in May 2021, when the token reached a price of just under $0.74. During that raging bull market, even stock market investors were registering strong excitement, as the so-called meme stock craze took over. This spilled over into the cryptocurrency market as well.
Dogecoin has benefited from various hype cycles that cause its price to soar in short order. Whether it’s a public mention by Tesla founder and Chief Executive Officer Elon Musk or the announcement by Mark Cuban that the NBA’s Dallas Mavericks accept Dogecoin as a method of payment, investors quickly drive up the price. That’s until the optimism quickly fades.
This helps explain why despite its rise this year, Dogecoin is still about 80% off its peak price. It’s worth pointing out that since the start of 2023, this token has underperformed the broader crypto market by a wide margin. One of the most speculative digital assets is likely falling out of favor, at least when compared to a few years ago. This trend doesn’t bode well for its future price performance.
What about the fundamentals?
I think the only way that 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 has. Dogecoin, which isn’t that much younger than the world’s most valuable cryptocurrency, was built as a joke to mimic Bitcoin as a payments network running on a 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 regulators in Washington and asset managers on Wall Street. The approval by the Securities and Exchange Commission (SEC) of Bitcoin spot exchange-traded funds is a case in point. A lot of capital is set to continue flowing to Bitcoin.
There’s another key distinction between Bitcoin and Dogecoin that can’t be ignored. It’s well known that the former has a fixed supply cap of 21 million, a level of scarcity that aids in its appeal from investors.
The latter, on the other hand, was created by its founders to be intentionally abundant. There are currently 144 billion Dogecoin tokens in circulation, a figure that increases by 10,000 every minute. For Dogecoin’s price to skyrocket, demand would need to outpace rising supply. That’s a tall task.
In my view, then, there are no fundamental reasons to be long-term bullish about Dogecoin. In fact, it’s very unlikely the token will rise 600% to reach $1 by 2030.
If you were interested in buying Dogecoin for whatever reason, I believe it would be nothing more than a speculative decision. That’s not a smart move to make with one’s 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 in 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