Dogecoin is a story on its own. It was created as a meme-coin with no serious intention, back in 2013.
Both the name and the renowned Shiba Inu logo are based on the meme. Dogecoin differs from Bitcoin in the fact that it is infinite in number – 10,000 coins are mined every minute and more than 5 billion coins every year.
For most of its existence, Dogecoin was not very well known. However, from April 2021 it underwent a rally that made it among the top ten biggest cryptocurrencies by trading volume.
Although each Dogecoin is just worth pennies, the overall value topped $50 billion?
What Makes Dogecoin Go Down?
But that does not provide a complete picture as to why the value of Dogecoin is just too low.
It is a simple concept of supply and demand. Unlike Bitcoin which is limited in number, Dogecoin is just so much in number that it is never able to just meet or be less than the demand. Therefore, the value is always less.
Also, since more than 10,000 coins are mined every minute, there are just not enough investors or cryptocurrency traders buying them.
Therefore, the price just keeps on reducing unless there is a general rally of cryptocurrencies or any influencer speaks in the favor of Dogecoin. Even then, the value rise of Dogecoin could be just temporary.
According to cryptocurrency experts, the price of Dogecoin has inflated so much that over time, it could inevitably fall.
Market crashes and other cryptocurrency rough patches just speed up the process. Also, the more the people sell off their Dogecoin, it just adds to the pile of coins out there, further reducing the value.
But Why Did Dogecoin Surge In The First Place?
Have you wondered why Dogecoin even surged in the first place, although it has been existing since 2013?
The reason is that some investors are artificially increasing its price by injecting lots of funds.
Dogecoin does not have fundamentals and because of its lack of utility, there has to be no logical reason for it to surge.
Since the price of each coin is minimal, it is easy for investors to hoard a lot of coins and artificially drive up the price. Also, some celebs have mentioned Dogecoin online which also increased its price briefly.
But note that the price surges might not last for a long time, and there will come a time when probably these temporary drivers of price surges might not even exist.
In case the investors decide to jump to another coin or meme coin, then the demand will reduce.
This makes Dogecoin extremely risky because it is highly volatile. The surges and falls are not predictable and they happen in a matter of a few hours.
Also Read: Why is Dogecoin So Cheap?
Will Dogecoin Sustain?
There are many other cryptocurrencies that are stronger than Dogecoin in terms of technology, the team backing it and they have a mission for the coin.
Bitcoin, for example, is the benchmark in cryptocurrency and has been widely used for everyday transactions by many merchants.
On the other hand, Ethereum provides the base for which blockchain-based applications can be made.
As mentioned earlier, Dogecoin was just made for fun. If there is no strong motive fixed for the coin that can provide it some utility, it is hard for it to sustain in the long run. Unless that and the technology is improved, Dogecoin will fade away from portfolios in just a few years’ time.
How High Can Dogecoin Go?
At the time of writing, the price of Dogecoin is $0.14. The question in every investor’s mind is how far can this value go?
If you are wondering if it will reach $1, then it is a possibility but subjects to changing perception of investors.
They should start valuing Dogecoin more than just a meme coin and put serious money on it.
There have to be more commercial investments and positive influences from social media and influencers.
If Dogecoin has to reach $10, then more money has to be flowing into DOGE than the coins mined.
Because Dogecoin does not have a supply limit and the block reward is so high (10000 DOGE), achieving a higher price becomes exponentially harder over time.
The highest value for Doge even when the cryptocurrency market was in a bull is just $0.70. If the price has to reach $10, then there has to be a consistent and exponentially growing inflow of investments.
If you are wondering Dogecoin can reach $100 or $1000, it is impossible. If you calculate the market capitalization required, it will be higher than the GDP of the USA, China, and in extreme cases, even all the countries in the world combined!
Practically, it is impossible to achieve that, and therefore the best-case scenario for Dogecoin is a two-digit figure close to $10.
Conclusion
Dogecoin, thus, is not an ideal investment option. You can grab a piece of it for just pennies but beyond that, it is not predicted to give any substantial income.
Before investing in Dogecoin or any cryptocurrency, be aware of the risks associated with them!
