Back in 2013, Dogecoin was first introduced as a “commemorative coin”.
It was introduced as a joke by Billy Markus and Jackson Palmer, jumping on the rampant cryptocurrency trend that was spreading wildly at the time.
But while it was launched as a joke, many see Dogecoin as a serious investment. Surprisingly, Dogecoin reached a 70-cent high in 2021, leading many to believe that it’s only a matter of time before it reaches the enviable $1 mark.
But can Dogecoin reach $1? Or, can it even go beyond that?
Dogecoin’s rapid development
Dogecoin still makes sense today when other currencies such as Ethereum, Bitcoin, and even Litecoin have practical applications, proving that the cryptocurrency market is known for its speculative culture.
Dogecoin was launched on December 6, 2013. After just 13 days, its value jumped 300%, rising from $0.00026 to $0.00095 in three days. Dogecoin trading continued to rise, and in 2014, during a very brief period, Dogecoin’s trading volume actually exceeded that of all other cryptocurrencies combined, including BTC.
One of the main reasons for Dogecoin’s continued popularity is the continued attention of Elon Musk, founder of Tesla and SpaceX.
In January 2021, Dogecoin skyrocketed, growing more than 800% in one day to $0.07. This is mainly due to increased user interest on Reddit.
In February 2021, Mark Cuban joined the bandwagon, claiming that the Dallas Mavericks would allow people to buy tickets and merchandise through Dogecoin, which led to another surge, with Dogecoin reaching $0.08.
Subsequently, it went public on Coinbase in April 2021, causing prices to jump again, reaching 10 cents on April 14. Within two days, the price jumped 400% to $0.45. Its market capitalization peaked at $50 billion, and the currency broke the 50-cent mark in the following month.
This marks a 20,000% increase in a calendar year. In May, Dogecoin reached its highest valuation ever, at $0.711. However, on the same day, the coin fell by more than 30%, falling to $0.47 in one hour. By the next day, its market value had lost more than $35 billion.
Can Dogecoin reach $1?
Before discussing Dogecoin’s potential to reach $1, it’s important to understand Dogecoin’s supply, as it plays an important role in determining demand.
The initial supply of Dogecoin was 100 billion coins, far more than any other cryptocurrency at the time. By 2015, however, all Dogecoin had been mined and another 5 billion coins were announced.
Theoretically, this means that the amount of Dogecoin will effectively double over the next two decades. When assessing whether Dogecoin can reach $1 or more, we need to consider two important factors: Dogecoin’s market capitalization and overall supply and demand dynamics.
With a seemingly unlimited supply, it’s hard to imagine the price of Dogecoin going up dramatically. If you look at DOG’s past gains, most of it has been driven by market speculation.
From this perspective, 10,000 DOGE are mined every minute. At present, there is already more than 130 billion DOGE in circulation, and it is expected to reach 180 billion by 2030.
Another factor is DOGE’s market cap, which is about $9 billion. If the coin were to reach $1, it would have to be as high as $80 billion. To do this, there needs to be a lot of cash inflow DOGE, which seems highly unlikely.
However, as the global economy begins to recover, there is always a chance of another Bitcoin bull market. Since most people who buy Dogecoin generally tend to hold it longer than other coins, there is always a chance to soar again.
While Dogecoin has one point where it is possible to reach the $1 mark, it seems highly unlikely that it will maintain its value at this price point. Dogecoin is one of the most volatile cryptocurrencies on the market, and its value is influenced by simple things like a noteworthy tweet or a mention.
How Prevailing Market Conditions May Affect Dogecoin’s Pricing
Since there are no supply restrictions, the only way for Dogecoin to reach $1, or more than $1, is when there is a considerable difference between the money injected and the coins mined.
This is difficult because the rewards of mining are so attractive. Miners can get 10,000 coins per block, which is one of the highest rewards available at the moment compared to other cryptocurrencies.
More importantly, we cannot ignore the changes in the cryptocurrency market. The big bull market of 2021 is over, and the value of many cryptocurrencies has shrunk.
In addition to this, the spending power is also greatly reduced, so the average person does not have enough additional investment funds to invest in commemorative coins like Dogecoin.
Another factor contributing to The rise of Dogecoin is celebrity endorsements. Every time a celebrity tweets about Dogecoin, it causes its value to jump a bit.
Many might argue that Elon Musk caused a spike in the value of Dogecoin, but that’s not a sustainable factor. Instead, it’s just one of many reasons Why Dogecoin may never succeed.
There are other Meme-Dog-inspired cryptocurrencies on the market right now
Back when Dogecoin was launched, it was the first and only dog-inspired cryptocurrency on the market. However, this has changed, and other coins like the Shiba Inu coin are becoming increasingly popular.
This means that people now have more options to invest in other souvenir alternative coins, not just Dogecoin. This further dilutes the market and reduces the chances of people pouring money into Dogecoin.
While it is clearly possible for Dogecoin to reach $1, based on the cryptocurrency market, this seems unlikely.