About three years ago, Dogecoin (CRYPTO: DOGE) was on an incredible journey “to the moon.” The dog-inspired token had won over speculators during meme-stock mania, hitting its peak price of under $0.74 in May 2021.
Dogecoin has been on a downward spiral since then, even as the overall cryptocurrency market continues on its path toward recovery. As of this writing, the token is 78% below its all-time high.
Perhaps the bulls are hoping that better days are ahead. Should you buy Dogecoin right now while it’s below $0.20?
Renewed interest
The crypto market is once again winning over investors. The industry’s market cap sits at $2.4 trillion (as of April 23), up from around $800 billion at the start of 2023. The monumental rise of Bitcoin, and Ethereum to a lesser extent, are propelling the gains.
Dogecoin substantially underperformed these top two cryptos last year. But it is winning the race in 2024, up 79% so far this year.
It’s really hard to pinpoint what causes these huge price swings as they relate to digital assets. One such catalyst might be the belief that after the approval of spot Bitcoin ETFs, there could be more approvals on the horizon. Another catalyst might be that X, formerly known as Twitter, could integrate Dogecoin as a payment mechanism on the social news app. In theory, this would drive demand for the DOGE token, pushing up its price.
Excitement for this possibly game-changing outcome looks to be waning, though. Dogecoin has tanked 27% in the month of April. Extreme volatility is the name of the game, as various hype cycles can quickly come and go.
Questioning Dogecoin’s utility
Dogecoin was created in 2013 to be a fun-loving alternative to Bitcoin. That’s really what the purpose was. So it’s pretty unbelievable that it has risen to become the eighth most valuable blockchain network today, with a market cap of $23 billion.
It has done that with virtually no real-world utility. To be clear, the fact that there’s a community of strong supporters is valuable in and of itself. But over time, I believe the excitement will eventually fade. If Dogecoin does become used to send payments on X, that’s a step in the right direction.
But I think this points to the fact that Dogecoin has minimal chance of long-term survival in its current state. In other words, I think there’s a significant nonzero percentage probability that this token’s price will eventually go to zero.
Up to this point, the crypto space has been viewed primarily as a speculative playground. And why wouldn’t it be? With prices skyrocketing in short order, people want in on the action to get rich.
However, if we look out 10 or 20 years from now, the cryptocurrencies that survive and thrive will have found success introducing real-world utility. Ethereum is trying to remove the need for intermediaries in a variety of industries, and it has a deep ecosystem of decentralized applications. Bitcoin is attempting to become a prominent competitor to the current monetary system, with compelling traits that make it a superior store of value asset.
Stacked up against these two industry heavyweights, Dogecoin looks to be a worthless project. Even though its price is way off from its record set three years ago, I think investors should stay as far away from Dogecoin as possible. Consider owning Bitcoin, Ethereum, or any of the many growth tech stocks out there if you have a higher tolerance for risk right now.
Should you invest $1,000 in Dogecoin right now?
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