TL;DR- it’s extremely unlikely that DOGE will blow past the $10 mark in the 2020-2022 bull market cycle. However, DOGE has a fighting chance at passing the $1 mark in this bull cycle if we have a blow off top at the end of 2021/beginning of 2022.
It’s pretty incredible how long DOGE has been able to stay in the top 20 cryptocurrencies. DOGE has outlasted several other coins with more believable real world use cases. But the music can’t play forever. What will happen to DOGE and its price?
What is DOGE
DOGE is a proof-of-work (it has to be mined) cryptocurrency. It isn’t really seen as a store of value, it can’t execute smart contracts, and it’s not an oracle crypto or privacy crypto like Monero either. It was started in 2013 by a couple of software engineers at Adobe and IBM as a joke. The coin is originally a fork of the LiteCoin chain, so it could reintegrate itself with LiteCoin and adopt some of that project’s use cases.
Why people hate on DOGE
A lot of crypto veterans like me love to hate on DOGE because it represents the part of the crypto space that we hate- speculation. This means investing in a coin only expecting to profit from it by later selling it. The problem with this is that the price will increase until there are no more buyers, and all of the coin holders will be stuck ‘holding the bag’. The price will then crash, and all the crypto critics will come out of the woodwork and use the opportunity to say that all crypto is bullshit.
To DOGE’s credit, there was no ‘pre-mine’ event, meaning the founders don’t hold huge shares of DOGE and weren’t looking to get rich. This is rare- most all coins have some sort of pre-investor or founder allocation that makes someone rich if the coin does well. One of the big reasons for being for crypto is that crypto is decentralized and shouldn’t be concentrated into the hands of the few. This is currently the case with fiat with governments and central banks.
How has DOGE made it this far?
I’ll refer you to this video by Guy over at the Coin Bureau. In it, he chalks up Dogecoin’s success to four things:
- Social Media
- Meme Culture
- Elon Musk
Let’s take a look at each of these.
I’m not a fan of Robinhood because you cannot have custody of your coins, and other reasons. One thing Robinhood has done well is make it insanely easy to trade crypto. Inaccessibility is something that’s been holding the crypto asset class back.
Now anyone with a smartphone (everyone) who has an account with Google Pay or the Apple App Store (also everyone) can download Robinhood and get Dogecoin. Needless to say, that can work miracles for the price of a coin. If you’re a crypto investor, your hope should be that crypto investing is made easily available to as many people as possible so the asset class can grow (and so can your bags!)
Meme culture & social media
We have an entire generation (Gen Z) of people who grew up with social media and memes joining the crypto investor community. Not to mention Millennials, who also love social media and meme culture. As we saw with stocks like GameStop, AMC, and Nokia with the Wall St Bets Reddit movement in early 2021, social media and memes have incredible power. DOGE is surely one of the biggest beneficiaries of this ape culture. I personally love DOGE memes and think the inquisitive Shiba on the coin is great.
The world’s richest man and likely first trillionaire (I’d say by 2040) is/will be Elon Musk. In America, we idolize tech founders for their achievements and too often look the other way at their flaws. But if someone worth $300 billion is obsessed with a crypto project, it might be safe to say that the project is going to stick around.
Only one wallet on the DOGE blockchain holds 30% of all DOGE. That’s about $12.5 billion worth of Dogecoin. This amount alone would land its owner on the Forbes Richest People list. Within the DOGE community, this wallet is referred to as ‘the whale wallet’. Popular opinion is that Elon Musk is indeed the whale wallet owner. Whoever the owner is, if they decided to sell their Doge, prices could decrease 30%, not including the FUD and network effects that would happen from the trade.
DOGE price prediction- will DOGE reach $10?
Unlike other coins, DOGE doesn’t have any major network upgrades in the pipeline. Usually with cryptos, there are price catalysts that are on the radar- for instance, the Ethereum 2.0 release or Polkadot parachain auctions. This along with technical analysis tells us that a $10 DOGE probably isn’t in the mix for at least 5 years.
IMPORTANT: a common mistake people new to crypto make is looking at the price of a single token. This price is indeed important- but what’s 10x more important is a coin’s market cap. Market cap answers this question: how much is the entire project worth? Market cap is (total coin supply X price). When people say that Apple is a 2 trillion dollar company, they are talking about its market cap and not price per share. In another article I pointed out how Shiba Inu (SHIB) would have to have an absolutely insane market cap to even make it to $0.01.
DOGE’s coin supply increases at 4% per year, a relatively high figure. For comparison, Bitcoin and Ethereum inflate at around 2-3% per year. The more coins in supply, the more the price will decrease without any other catalyst.
In order for DOGE to reach $1, it’s market cap would have to be around $120 billion, which is very high but not unthinkable right now in this crypto market. For comparison, Binance coin (BNB) has a market cap of $92 billion as the #3 crypto and Ethereum has a market cap of $544 billion as the #2 crypto. If you’ve been in crypto for a while, you know how crazy price action can get. Say Bitcoin goes to $1 million- I could easily see DOGE getting to $10 then. Don’t laugh. It. Could. Happen.
Beware memecoins and shitcoins
Sadly, I would have to put DOGEcoin into the memecoin/shitcoin category of cryptos. Since these cryptos lack fundamentals and real world use case, there isn’t much holding up the price except for mania and speculation. Someday, that engine is going to run out of steam. In crypto market dips, memecoins are usually among the worst performers. For instance, in the May 2021 correction, Bitcoin dipped roughly 40% off its all time high, while DOGE fell roughly 75% off its all time high. Lots of people lost a lot of money. Do you want to be the bag holder when things go to shit? Be careful with crypto!