Dogecoin (CRYPTO: DOGE) was created as a joke by two associates in 2013. Cryptocurrency was turning into very critical again then with the rise of Bitcoin, they usually needed to lighten the temper. The Doge meme was sweeping the web on the time, they usually used it as inspiration to launch Dogecoin.
It went on to develop into one of many world’s most respected cryptocurrencies in 2021 when its market capitalization topped $90 billion, helped by influential figures like Elon Musk who began selling it on-line. However Dogecoin didn’t discover a actual use case, and since speculative frenzies by no means final, the meme token misplaced 90% of its worth by mid-2022.
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Traders spent the following two years licking their wounds, till Dogecoin staged one other unimaginable rally when Donald Trump received the presidential election final November. It didn’t surpass its all-time excessive, nevertheless it did finish 2024 with a whopping 251% acquire.
The meme token is now crashing as soon as once more, leaving traders feeling a way of déjà vu. So is that this a shopping for alternative or the beginning of a a lot steeper decline?
Trump and Musk: Double-edged swords for Dogecoin
Tesla Chief Government Officer Elon Musk has supported Dogecoin since 2019 by recurrently posting memes on social media and fascinating in banter with different lovers. The token actually gathered momentum in 2021 within the lead-up to his look on Saturday Evening Dwell on Could 8, the place he participated in a Dogecoin-themed skit.
Actually, Dogecoin rose to a value of $0.73 that very night time, which translated to a acquire of 15,769% for the 12 months. Sadly, it additionally occurred to mark the height. Traders rapidly realized Musk did not have a concrete plan to again up his promotional actions, and as I discussed earlier, the meme token proceeded to lose 90% of its worth by mid-2022.
Quick-forward to 2025, and Trump is engaged on his promise to make the U.S. the crypto capital of the world. Underneath his watch, the Securities and Exchange Commission (SEC) is withdrawing or pausing a few of its energetic circumstances towards crypto exchanges and associated companies. Plus, the president established a strategic Bitcoin reserve and digital property stockpile, which may see the U.S. authorities develop into an energetic purchaser of cryptocurrencies someday (with approval from Congress).
However Dogecoin traders have been whipped right into a frenzy for an additional cause after Trump’s election win. The president established the Division of Authorities Effectivity, or DOGE, shortly after he took workplace, and appointed Musk to run it. It focuses on discovering wasteful authorities spending to assist shrink the nationwide debt, and its title is a transparent reference to Musk’s favourite cryptocurrency.
However the Trump administration has been a double-edged sword for Dogecoin. On April 2, Trump introduced a ten% tariff on all items imported into the U.S., and he additionally revealed plans to impose bigger reciprocal tariffs on imports from particular international locations. Tariffs do not instantly have an effect on digital items or property like Dogecoin, however shares and cryptocurrencies tumbled throughout the board as traders flocked to the security of money out of worry that slower financial progress could be across the nook.
In consequence, Dogecoin crashed under $0.20, and is presently down 66% from its current 52-week excessive of $0.47.
Picture supply: Getty Photographs.
Fundamentals matter
Though the tariffs helped speed up Dogecoin’s decline, it was actually trending decrease due to a collection of structural points. First, shoppers and companies merely have not adopted it as a fee mechanism, which implies demand solely comes from speculative traders. In response to crypto listing Cryptwerk, simply 2,095 companies all over the world settle for Dogecoin as fee for items and providers.
Second, Dogecoin has a provide problem. There are 148.8 billion tokens in circulation, and whereas there’s a cap on what number of new tokens might be issued every year, there isn’t any official finish date. In different phrases, new Dogecoins shall be minted in perpetuity. I can not consider a single investment-grade asset with an infinite provide that has delivered optimistic returns for traders over the long term, and this meme token in all probability will not buck that development.
Déjà vu for long-term Dogecoin supporters
Since Dogecoin’s newest speculative rally topped out at $0.47, which was manner under its 2021 excessive of $0.73, it seems traders have been being extra cautious this time round. The meme token now’s buying and selling at simply $0.16, however historical past suggests there may nonetheless be some draw back forward as a result of it bottomed out at $0.06 after its final collapse in 2022.
That will indicate an extra lack of 65% from right here, and since nothing has basically modified for Dogecoin throughout the previous few years, traders merely cannot rule out that situation.
There isn’t a indication that Dogecoin will play a job within the Division of Authorities Effectivity, neither is there any signal traders need to personal it as a hedge towards tariffs and commerce tensions, regardless of the actual fact the meme token is not instantly affected by them.
In consequence, this feels so much like 2022, which implies the current decline in all probability is not a shopping for alternative. Traders would possibly need to steer clear as an alternative.
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Anthony Di Pizio has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Bitcoin and Tesla. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
