Predicting Dogecoin's Position in the Next 12 Months
Rewritten Piece:
With cryptocurrencies rapidly gaining traction as an alternate asset class, Bitcoin and Ethereum remain the most well-known digital tokens. However, some investors have developed a penchant for riskier options. Dogecoin, for instance, has seen a价格 increase of 18.5% over the last year (as of March 17), which might seem impressive but hides a more volatile behind-the-scenes story.
Let's delve into the factors driving Dogecoin's volatile price movements and examine where this crypto may be heading in the next year.
Dogecoin's abrupt surge and fall
As the graph illustrates, Dogecoin's price didn't exude much trustworthiness for most of 2024. The cryptocurrency hovered around $0.10 up until October.
Dogecoin Price data by YCharts.
However, starting from November, the price saw a meteoric rise. I suspect that the crypto might have captured significant interest during this period due to overlapping with the presidential election.
Specifically, Tesla CEO Elon Musk was assigned a new role, the Department of Government Efficiency (DOGE), by the Trump administration. In this role, Musk was tasked with streamlining government operations by identifying areas that inefficiently use federal funds.
But wait, isn't this just government work? What's the connection to Dogecoin? My guess is that some investors jumped on a narrative suggesting that DOGE and Dogecoin might be linked in some way. After all, the crypto's ticker symbol is DOGE, and Musk himself has expressed fondness for Dogecoin playfully in the past.
Following the short-lived euphoria following Election Day, I think investors began to realize that Musk's government duties were independent of Dogecoin, initiating a wave of selling.
Not all crypto investments offer the same prospects
The graph below contrasts Dogecoin's price returns against Bitcoin's over the previous few years.
Dogecoin Price data by YCharts.
While Bitcoin has clearly outperformed Dogecoin, I'd like to draw your attention to a different concept. As the chart above demonstrates, investing in the crypto realm involves a degree of considerable volatility, far surpassing that of traditional stocks from the S&P 500 and Nasdaq Composite.
But even with that consideration, Bitcoin's price fluctuations seem rather tame compared to those experienced by Dogecoin. I believe the primary reason for this is that unlike Dogecoin, it has gained steady support from institutional investors, Wall Street analysts, and even government agencies—key players in the development of spot Bitcoin exchange-traded funds (ETFs).
Where is Dogecoin heading from here?
In my opinion, the reason Dogecoin hasn't received the same level of support compared to other cryptocurrencies is its lack of practical use in the real world. Bitcoin might still be a far cry from becoming a mainstream method of payment, but it has gained significant popularity among businesses and smart-money investors.
In stark contrast, Dogecoin's price movements typically follow trends concocted by speculative narratives that often don't amount to much. Consequently, it's nearly impossible to pinpoint an exact catalyst for a resurgence in its price.
Over the next year, I anticipate witnessing oscillating price movements. However, I don't expect Dogecoin to reverse its downward trend. I'd advise steering clear of chasing any momentum in Dogecoin to avoid being left holding a bag full of subpar crypto.
- The volatile nature of Dogecoin, as demonstrated by its price movements in 2024, could be a potential disadvantage for some investors, especially when compared to the more stable Bitcoin.
- In 2024, Dogecoin's price, as depicted in the YCharts, saw a significant surge in November, which some analysts attributed to the hype surrounding Elon Musk's new role in the Trump administration, despite his role being unrelated to Dogecoin.
- Despite its volatility, Dogecoin's future is uncertain, with experts pointing out its lack of practical use in the real world compared to Bitcoin, which has gained support from institutional investors, Wall Street analysts, and even government agencies.
- By 2024, Dogecoin's price may experience ongoing fluctuations, but most analysts predict a continuous downward trend, suggesting caution for investors considering investing in Dogecoin to avoid potential losses.
