With a current market capitalization of $2.3 trillion, the cryptocurrency market is back in fashion. Thanks to the increase in the price of bitcoin (CRYPT: BTC)the most valuable digital asset in the world, investors could be looking at other tokens in the hope that they can skyrocket.
There is perhaps no other cryptocurrency that better exemplifies the 2021 meme stock craze than Dogecoin (CRYPT: DOGE). This speculative token skyrocketed in value during a bull market, but as of February 28, it was 86% below its peak price.
Can Dogecoin recover and rise 760% to one day reach the dollar? Let's take a closer look to find out the chances that this token could achieve a new all-time record.
The purpose of Dogecoin
Created as a fun alternative to Bitcoin, Dogecoin is in a block chain network that was created to have an abundant supply of tokens. There are currently 143 billion tokens in circulation, a figure that increases by 10,000 every minute.
Dogecoin has no functionality other than to be used as a tool for financial gain or to send money to others. According to cryptwerk.com, only 2,523 merchants worldwide accept it as a payment method, which is a drop in the ocean when it comes to the number of businesses out there.
There is no reason to be optimistic about Dogecoin achieving wider adoption in the future. Data from venture capital firm Electric Capital shows that only 19 full-time developers are working on Dogecoin, ranking it 90th out of 100 blockchain networks. This does not bode well for its long-term viability.
For Dogecoin price to even remotely have a chance of hitting a new high, it would need to benefit from another momentum-driven hype cycle. This means a public mention of the token by someone like Elon Musk either Cuban brand, and its supporters rushed to buy the cryptocurrency. It's hard to know if this will ever happen.
In 2023, the value of the overall crypto market approximately doubled in value. But Dogecoin only rose 27%. For one of the most speculative digital assets out there, it would be expected to rise rapidly when market conditions were favorable. This simply was not the case, probably demonstrating moderate enthusiasm.
Promising alternative
Investors who are serious about putting money to work in the cryptocurrency industry should consider Bitcoin. Unlike Dogecoin, Bitcoin was launched as a scarce asset. There will only be 21 million coins in circulation, according to a predetermined inflation schedule. This alone gives it value, particularly compared to fiat currencies that constantly degrade.
Bitcoin seems to have achieved it in terms of becoming a legitimate financial asset. The recent introduction of spot exchange traded fundsthat are attracting billions of dollars in inflows, can be seen as something of a seal of approval from the Securities and Exchange Commission, as well as major traditional asset managers who want to provide Bitcoin exposure to their clients.
Given that its price has skyrocketed in recent years, especially at a time when there are inflationary pressures, it could indicate that it is doing its duty as a store of value. I don't think Dogecoin lives up to this kind of perception in the market.
Despite its extremely volatile nature, throughout its history, Dogecoin has been a big winner. However, I think the investment community's interest is fading.
Not only do I think this cryptocurrency will never reach the dollar, but I also wouldn't invest my hard-earned savings in it. In fact, I suspect this token has a better chance of going to zero first. There is a much better option for investors to choose from.
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Neil Patel and its clients have no position in any of the stocks mentioned. The Motley Fool has positions and recommends Bitcoin. The Motley Fool has a disclosure policy.
Can Dogecoin catch up with the dollar? was originally published by The Motley Fool
