Dogecoin has garnered quite a lot of attention this year from crypto traders, meme accounts, and even pop culture fans who watch Saturday Night Live. It reached an all-time high value of $0.6848 on May 7, 2021.
With the bull run of Dogecoin this year and the steep ascent it had made at the beginning of this year, many experts and users started asking questions such as Can Dogecoin reach $100?
Dogecoin reaching $100 is highly improbable due to the circulation volume, market cap, and lack of driving factors for the currency’s existence.
Let me quickly break it down for you in a simple manner, here are the three primary reasons why Dogecoin wouldn’t be able to reach $100.
Terrible Tokenomics of Dogecoin
Dogecoin was developed in 2013 as a meme coin to take a dig at cryptocurrencies and the world of crypto in general. However, people started paying more attention to it and even became a serious investment entity over the years.
To understand if Dogecoin will reach $100, it is essential first to understand its tokenomics.
Supply And Market Cap
Every cryptocurrency has a supply number. This can be a limited or unlimited supply. For instance, Bitcoin’s maximum number of coins is 21 million, whereas Dogecoin doesn’t have a limit. Currently, the number of Dogecoin in circulation is about 131 billion.
The market cap of Bitcoin is roughly $850 billion, whereas the market cap of Dogecoin is $31 billion. This is why Dogecoin is one of the biggest cryptocurrencies in the market despite the value of 1 Dogecoin being merely a few cents. On the other hand, Bitcoin is the largest crypto, where one Bitcoin is currently about $50,000.
For instance, if you take Yearn Finance’s YFI, it only has about 36,000 tokens in supply, and its market cap is about $1.2 billion. However, the value for one YFI is about $33000. This shows that YFI has a high volume is to market cap ratio when compared to Dogecoin. Thus it’ll be easier for crypto like YFI to grow compared to crypto like Dogecoin.
Another aspect is how the tokens are distributed. Dogecoin had a fair launch, meaning that there were pre-mined tokens, allocation to founders or partners, etc. Dogecoin is wholly mined, governed, and run by the community.
However, irrespective of fair launches, it is crucial to see how these tokens in circulation are distributed at any point in time. In the case of Dogecoin, about 100 people control a majority of the Dogecoins in circulation, and one mysterious whale is HODling more than the volume of 80 to 90 of these people combined.
This is a massive risk for investors since the HODler could sell their share and almost instantly crash Dogecoin’s market at any point of the time.
Furthermore, every year 5 billion coins are added to circulation as rewards to the Dogecoin miners. This results in the value of Dogecoin dropping due to inflation.
If these risks weren’t enough, we finally have the most significant risk posed by Dogecoin due to its utility or, rather, the lack of it. The crypto asset doesn’t have any other purpose other than being a meme. It doesn’t add value to the world and doesn’t solve any problem. In essence, it doesn’t have any use case.
If you take other coins such as Bitcoin and Ethereum, for instance. Bitcoin is a payment currency, an alternative to fiat currency to buy products and services. On the other hand, Ethereum’s blockchain enables smart contracts to help developers build decentralized apps (dApps). These dApps, in turn, could have various purposes.
As you see, cryptocurrencies need to have some purpose for the traders or users to buy and use the currency. This would affect the price of the asset. Without it, sustaining in the long term wouldn’t be possible.
Due to these risks, it is highly unlikely for Dogecoin to reach $100.
But despite these risks, the coin is still in the 8th position on CoinMarketCap and is still considered one of the largest cryptocurrencies. So what makes the coin sustain?
Dogecoin’s Fundamental Value
Dogecoin has faster transactions than Bitcoin, Litecoin, and Ethereum, and the transactions rates are much cheaper. Though these are impeccable traits for a meme coin, they still don’t make for lack of purpose.
So why do people still mine and invest in the asset?
Dogecoin has about 150 TH/s as its hash rate, and Litecoin has about 170 TH/s. As you see, there’s not much difference between the two. Hence people who can mine Litecoin can also mine Dogecoin and vice versa. They do so to gain more profits.
Furthermore, as mentioned before, miners of Dogecoin are rewarded additional Dogecoins at random periods, and every year 5 billion Dogecoin are added into circulation.
As to why people invest in it – the reason is twofold:
- Initially, the concept of meme coin sounds fascinating, and that could be an enticing factor.
- However, once the noise died, some people actually believed in the coin. Furthermore, endorsements from celebrities such as Elon Musk have a significant effect on the investment numbers.
The second reason brings us to our third factor – market sentiment.
Market sentiment has been one of the major factors for price fluctuation for any asset. For cryptocurrencies, this factor adds to the high volatility.
With Elon Musk being the most famous face associated with Dogecoin, his tweets drastically impact the meme coin prices. The correlation between his tweets and price surge is just too evident.
At the beginning of this year, on February 4th, Elon Musk tweeted “Doge” just one word. The price was at about $0.034 at the beginning of the month, and the price peaked at $0.078 by 5th February. Such is the effect of his tweets.
After the entire SNL fiasco, where he mentioned he’ll be talking about Dogecoin on the popular show. Just as he did so, the price peaked in the following days till $0.7 during his appearance at SNL. Hence you can see how celebrities can easily sway market sentiment.
In fact, people had predicted it reaching $1 during/post SNL, but that didn’t happen since the billionaire didn’t talk about the meme coin.
Why Can Dogecoin Only Reach $1 or $2?
There’s one thing to note here, though. It came pretty close to the $1 mark and Dogecoin will likely reach this milestone or even surpass it to $2 in the next few years. Here’s why:
The Dogecoin Foundation is back with an advisory board that includes Ethereum’s co-founder Vitalik Buterin and Elon Musk’s representative, Jared Birchall, amongst others.
Buterin will be helping Dogecoin create a roadmap and even suggested that the meme coin shift to Proof of Stake in one of his tweets to perform better. This is because with staking, the coins are locked in for a period, which means even if the value increases, people wouldn’t be able to sell/dump their coins in the market. Hence, there’s some sort of security for the investors and miners.
With a roadmap and newer projects under the works, this is one of the first steps the foundation is taking to build an ecosystem.
When the projects are announced, based on their merit and, of course, the noise created by the self-acclaimed Dogefather Elon Musk could propel the value to $1. However, a $100 mark is highly unlikely.
Every other altcoin and cryptocurrency has followed the footsteps of Bitcoin in terms of its growth and value. Hence if Dogecoin were to reach $100, it means that the demand is that high.
This, in turn, means that by the time Dogecoin reaches $100, Bitcoin’s value should have proportionately increased as well, and that amount would be absurd.
If it reaches $100 even in the next decade years, its volume would be 180 billion, and hence the market cap – $18 trillion and that value is unrealistic because it is higher than the GDP of most major countries in the world.
So Bitcoin’s market value would be way more than the GDP of pretty much any country. So a $100 value is implausible.
Thus, as you can see, most factors such as supply, volume to market cap ratio, inflation, token distribution, etc., point to Dogecoin’s inability to reach $100. It can make it $1 or $2 at the most provided the Doge foundation brings in some core changes.
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Anish loves reading, researching, and writing about crypto and blockchain. He started his crypto journey early in 2017, what started as a fad is now a full-time hobby. He curates guides after thorough research on platforms and is responsible for the most in-depth guides on the site. You will find him walking his dog (not Doge) when he is from his Laptop.