Dogecoin's transactional use is limited, and it remains largely speculative.
Over the past year, the digital asset markets experienced a significant rally following the approval of Bitcoin $110,175 ETFs and Donald Trump's victory in the U.S. Presidential election. Within this period, all of the top 10 cryptocurrencies by market capitalization hit new peaks. However, Dogecoin $0.213767, once a sensation, did not follow the same trajectory.
ContentsWhy Did Dogecoin Fall Behind?Elon Musk's Influence Why Did Dogecoin Fall Behind?
Despite Bitcoin, Solana $200, BNB, and XRP reaching new highs, Elon Musk's preferred meme coin, DOGE, remains over 70% below its all-time high of $0.73, achieved in 2021. According to CoinGecko data, Dogecoin recently traded slightly above $0.21. Although it showed recovery when Musk attended Trump's campaign rally, it peaked at around $0.48 in December and has not surpassed $0.40 since January.
Grayscale's Research Director, Zach Pandl, suggests that investors are currently interested in digital assets with real utility. Meme coins, famous for their lack of utility, are thus less attractive in the market. While Bitcoin is promoted as a long-term store of value, Ethereum's network is viewed as useful for applications like stablecoins, desired by companies from JP Morgan to Meta.
Initially created as a joke to satirize the crypto world, Dogecoin achieved unexpected popularity when Elon Musk began sharing memes about it. While demand for the coin seemed apparent, its origins and purpose remained primarily within the realms of entertainment and speculation.
Elon Musk's Influence
Elon Musk, the CEO of SpaceX and a billionaire, has publicly endorsed Dogecoin for its appealing nature "for the people" and claimed it was different from Bitcoin. His fondness for dogs and memes further strengthens his support. In the past, billionaires like Mark Cuban suggested that Dogecoin could be ideal for transactions due to its token economics.
Cuban noted that DOGE's low price per coin makes it a spendable asset, unlike Bitcoin. Nevertheless, Dogecoin has not yet become widely used for transactions and is still largely perceived as a speculative asset. Furthermore, it has not offered investors returns comparable to Bitcoin or Ethereum $4,272 in recent years.
Digital asset management firm Arca reports that many cryptocurrencies did not deliver strong returns this year. Specifically, 75% of the tokens observed by the firm showed negative returns since the start of the year.
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