Is Dogecoin Dead?

Is Dogecoin Dead?

Robert McDougall 

January 9, 2024

Cryptocurrency

Created as a joke by software engineers Billy Markus and Jackson Palmer in late 2013, Dogecoin is a peer-to-peer digital currency. As a popular meme coin, DOGE features the face of a Shiba Inu dog as its name and logo. But who knew a joke coin with no utility at the time of origin would become one of the most popular meme coins today?

Thanks to the support of popular personalities like Elon Musk, CEO of Tesla, DOGE has witnessed immense highs ever since its price peaked for the first time in 2021. However, alongside growing popularity, this meme coin is not new to criticisms and controversies about its lack of utility. After all, what value can a coin that only focuses on jokes and memes bring to its investors in the long run? 

This very fact has made DOGE witness rapid price fluctuations over the years. But does that mean it is now (or soon going to be) dead? With its growing adoption by companies and constant support from Musk, DOGE stands on a scale that can tip to either side. 

Let’s take a closer look to gain a better understanding of what could happen to Dogecoin.

The Rise and Fall of Dogecoin 

Dogecoin jumped in popularity in early 2021 when a group of Reddit users began promoting it and pushing its value. At that time, the craze slowly started developing, with more people investing in it. With this rapid adoption of DOGE, its value reached great heights in only a few months, benefitting early investors with large gains.

What Contributed to Dogecoin's Popularity in the Crypto Community?

While the historical rise of DOGE is not hidden from anyone, you might wonder what led to it. From what we understand, one of the primary reasons behind Dogecoin's success was the consistent support from Elon Musk. He wrote many tweets about his fondness for DOGE, and together with support from other celebrities like Snoop Dogg, Dogecoin reached dizzying heights, with an all-time high of $0.74 on May 7th, 2021.

The reason the price rose so high by that date was due to an upcoming Saturday Night Live show, where Elon would be featuring. There was speculation that after he mentioned Dogecoin on SNL, the price would shoot up past $1. However, it had the opposite effect, because instead of supporting the coin, Musk referred to it as "a hustle" during a comedy skit, causing the price to fall by 29.5%, dropping to 45 cents. 

Catalysts Behind Dogecoin's Price Fluctuations:

Is Elon Musk’s constant favoritism towards DOGE the primary reason behind its unpredicted success? From what we explored, there is more to what contributed to the meme coin's rapid price fluctuations, including: 

  • Social Media Hype: Other than Elon, other influential personalities — like rapper Snoop Dogg and popular TV host Ellen DeGeneres — posted about the coin on their social media accounts. This created a greater buzz, attracting new investors towards the coin.
  • Technical Updates: Dogecoin's developers aimed to improve the network's speed, security, and scalability, which was a factor that appealed to consumers and businesses. Specifically, Dogecoin won over investor trust over time when its developers and Elon Musk proposed an upgrade to reduce the coin’s transaction fee from 1 DOGE to 0.1 DOGE in June 2021. This upgrade was called Core 1.14.5, and was implemented in July 2021.
  • Market Sentiment: The entire mood of the crypto market, which can be influenced by global events, legislation, hacks, scams, and other reasons, has also affected Dogecoin. Dogecoin, for example, fell by more than 40% in May 2021 when China cracked down on cryptocurrency mining and trading.

Recent Developments and Adoption 

Did you know crypto specialists feel that Musk's support has, and could continue to, propel Dogecoin to new heights? 

A clear example of this is when Elon Musk changed the iconic blue bird logo on Twitter (now rebranded as X) with Dogecoin's popular 'Doge' logo on 3rd April 2023. While this change lasted less than a day, it quickly made DOGE trending on Twitter while increasing its value by 37%.

Dogecoin's Adoption by Mainstream Companies and Blockchain Platforms: 

As we delved deeper into Dogecoin’s acceptance in the Web2 and Web3 space, we found that many companies and platforms welcomed the meme coin with open arms. With its reduced transaction fees and continual support from Elon Musk being the primary reason behind this acceptance, some companies that accepted DOGE over the years include:

  • Tesla: Tesla, Elon Musk's electric vehicle and sustainable energy company, is a prominent backer of Dogecoin and has started accepting the token for certain merchandise on its website.
  • Fantom: This fast, scalable, and secure decentralized application platform supports Dogecoin via its NOWNodes service, an RPC node access service.
  • Coinbase: Dogecoin is listed on Coinbase, one of the largest and most trusted cryptocurrency exchanges.
  • Twitch: This American video live-streaming service provider accepts Dogecoin from its users for tipping streamers.
  • GameStop: The American gaming merchandise retailer accepts Dogecoin payments using the popular pure-digital payments network, Flexa.
  • EasyDNS: This Canadian internet service provider allows Dogecoin as a payment option for domain registration.

The Dogecoin Community's Active Engagement and Development Efforts

One of the primary factors that make a cryptocurrency a hit or miss is its community’s support. Amazingly, Dogecoin doesn’t have any less of that. Through our research, we found the Dogecoin community to be dedicated and passionate. 

In fact, the community behind this meme coin, also known as Doge Army, is actively seen participating in activities on various online platforms and supporting charity organizations. One such organization that was created to capitalize on this meme coin’s online presence is Dogecoin Foundation. 

What’s interesting about this non-profit organization is that it promotes Dogecoin development and adoption. Yes, an entire organization focused on promoting a joke coin and emphasizing its development and advocacy. But that’s not all that the Dogecoin Foundation is about. 

The not-for-profit organization also collaborates with other organizations and projects that share the dogecoin concept. This includes the foundation’s past collaborations with Hack Club, a network of young developers, and Dogetti, a social media platform that pays members with Dogecoin.

Criticisms and Challenges 

Even though DOGE has come a long way, what has made this meme coin’s meteoric rise short-lived? While it’s evident that Dogecoin had no practical utilities to remain on the top, there are other factors that made the coin’s value fluctuate wildly. Specifically, here are a few that made investors doubt the future of this meme coin:

  • High-Inflation Rate: Because there is no restriction on the number of coins that may be minted, Dogecoin has a high inflation rate. This means that when more coins are mined, the value of each coin will decrease.
  • Absence of Independent Transaction Network: Dogecoin relies on the Litecoin network for transactions, resulting in a low-security token. This means that if Litecoin miners quit supporting it, Dogecoin will be exposed to attacks.
  • Slow Transaction Speed: Dogecoin's transaction speed is slow because it employs a proof-of-work algorithm that requires significant computational power and energy. This makes Dogecoin transactions slower and more expensive than other cryptocurrencies.
  • Outdated Technology: Dogecoin lacks innovation because its software has not been updated since 2019. This implies that Dogecoin is missing out on some of the most recent features and enhancements implemented by other cryptocurrencies.
  • Regulatory Risks: While Dogecoin has not faced SEC actions, it raises concerns due to its extremely low or potentially non-existent risk ratio, possibly leading to scrutiny by the SEC in the future. While this is a concern, numerous Asian nations, notably China and Thailand, have banned or restricted Dogecoin and other cryptocurrencies. This is mainly to protect investors from monetary losses, prevent money laundering, and maintain economic stability.
  • Short-Lived Rallies: Dogecoin holders are also concerned about Elon Musk's short-lived rally for the token. Musk’s promotion boosted its value; when he changed Twitter logo to Dogecoin symbol, $DOGE price surged from $0.079 to $0.094 in a day. Based on our research, these brief rallies initiated by Elon Musk have led to reports that scrutinize him for potential insider trading related to Dogecoin.
  • Growing Competition: Another significant challenge Dogecoin faces is the meme coin competition. Because of the advent of competing meme coins such as PepeCoin, traders have shifted their assets from DOGE to PEPE, or other new meme coins in quest of gains.

The Effect of Market Speculation on Dogecoin’s Price Movements:

Like any other cryptocurrency, the opinions and speculations of market experts have had a huge impact on how investors look at Dogecoin. Some analysts suggest that the price changes of Dogecoin are primarily driven by market speculation and excitement rather than by its underlying value or utility.

As an example, let’s consider what the cryptocurrency expert and author of The Crypto Trader, Glen Goodman, had to say about Dogecoin’s future. While Goodman himself made money from this token, he still shared with Newsweek in a statement how DOGE is a hazardous coin. His statement also mentioned that this meme coin could lose its entire value one day. 

According to Goodman, purchasing Dogecoin is equivalent to gambling than investing. Mainly because there is no way to calculate a fair value for Doge, especially when very few people use it for real-world transactions. This backs up his, and many other analysts' predictions, about how DOGE will crash to almost zero value one day. 

The Future of Dogecoin 

Like any other cryptocurrency, Dogecoin's future depends on various factors such as market trends, community support, utility, and endorsements. Considering these factors, the CoinCodex analysts predict this meme coin's higher side value to reach $0.171854 by 2025 and $0.136309 by 2030. 

Apart from DOGE, the cryptocurrency market as a whole is expected to grow considerably in the next few years. Some reports say the global cryptocurrency market will grow at a compound annual growth rate (CAGR) of 11.1% to 30.4% over the next few years. 

As per these reports, emerging economies (like India, China, and Brazil) and developed countries (like the US, Germany, and Japan) are likely to give companies in the crypto market many chances to grow.

For instance, Brazilian companies united under Abcripto signed a self-regulatory rule in 2020 to boost crypto acceptance. This pact established uniform operational methods and compliance standards, endorsed by major players like Foxbit, Bitcoin Market, Ripio, and Novadax.

This growing crypto adoption proves that the market will further expand and introduce more growth opportunities for investors and companies promoting it. At the same time, as the crypto market grows, analysts believe Dogecoin’s value and adoption will also increase in the coming years. After all, as we discussed earlier, Dogecoin is growing to be accepted and used on more platforms over the years.

Community Sentiment and Impact 

Through our in-depth research, we saw that DOGE has a huge community of supporters posting and participating in activities related to the coin on platforms like Twitter and Reddit. In fact, the DOGE community often uses related hashtags, memes, and events to promote and celebrate the coin on social platforms. 

Here, it’s evident that this solid support has influenced the price and demand of Dogecoin from time to time. A good example would be the DOGE community's efforts to push its price to $1 on Doge Day, April 20, 2021. However, it’s worth noting that these efforts didn’t make any difference in DOGE’s price then. Instead, Doge finished the day in the red, closing at $0.31

But that doesn’t change the fact that community activities and support towards meme coins like DOGE have a huge impact on the token's price fluctuations. Related research also proves that the average value of DOGE is frequently impacted by tweets on the same. This makes social media support a driving factor of popularity and growth achieved by the meme coin. 

Conclusion

At the time of writing, DOGE’s value is $0.07571. This is much lower than the all-time high of DOGE recorded in 2021, i.e., $0.74. While this already hints at DOGE losing its momentum and investors’ trust in the competitive crypto market, the mixed assumptions of crypto analysts still make us believe in the possibility of a ‘what if.’ 

Even then, we suggest you DYOR (Do Your Own Research) before placing your trust and money in DOGE. After all, the possibility of sudden price hikes and falls in the volatile crypto market is always there. So it’s important to keep this in mind to make informed decisions when considering what the future holds for DOGE.

We hope this detailed article will help you better predict the future of Dogecoin.


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