Dogecoin saw an impressive run in price during 2021. It has also seen a fairly large pullback in 2021. This has led many in the cryptocurrency to ask, did Dogecoin die?
To answer the question, Dogecoin has certainly not died. The price at the beginning of the year was about $0.01. Dogecoin currently trades at ~$0.30. That is a nearly 3000% increase in price YTD.
So no, Dogecoin is not dead. However, this article will explain why some are saying that Dogecoin has died. We will also offer a price prediction for Dogecoin through the rest of 2021.
Why Some People Say Dogecoin Died
The main reason you may have heard that Dogecoin died does not have anything to do with the price. Remember, Dogecoin is still up 3000% YTD.
A dead cryptocurrency would be worthless. It would also have no trading volume. In fact, we would say that Dogecoin is unlikely to die at this point. Cryptocurrencies rarely die when they get to the level of popularity of Dogecoin – there is simply too much money and interest in the project for it to die.
Dogecoin Hype Subsided
Dogecoin is clearly not dead in the literal sense of the term. Miners are still mining it. People are still trading it. And the price is $0.30.
However, when people say that it died they mean that the hype surrounding Dogecoin died. For those that don’t know, Dogecoin was receiving celebrity endorsements from Elon Musk and Snoop Dogg.
Musk actually made an appearance on Saturday Night Live discussing his support of Dogecoin.
That is where the problem started.
Musk said on Saturday Night Live that Dogecoin is “a hustle.”
That statement sent the price of Dogecoin tumbling as many expected a huste to imply that Musk would dump his Dogecoin.
Now, to be fair to Musk, Dogecoin is basically a hustle. The cryptocurrency has no real use, the tokenomics are terrible, and the development team is practically non-existent. The only logical explanation for him hyping the coin is as some form of hustle.
Despite that, Musk stating that it was a hustle confirmed what many already suspected and the price followed suit.
It was at this moment that many said that Dogecoin died. There is another reason that people are saying Dogecoin is dead, though.
Dogecoin Stopped Growing
Cryptocurrency investors fall into two major categories. Those that truly believe in the technology. These investors understand that it takes years for it to become popular. They are also much more likely to contribute to the code repository.
The other segment are those in cryptocurrency in order to make fast cash.
Most Dogecoin investors, unfortunately, fall into the second category. They see the high price of Bitcoin and assume that the days of 3000% gains in Bitcoin are over. This leads to them investing in smaller cap cryptocurrencies like Dogecoin.
So, what is the problem with this investment strategy?
These rookie cryptocurrency investors assume that once linear, or even exponential, growth stops that the cryptocurrency is dead. This mostly comes from a failure to understand that the rise of Bitcoin was not overnight.
The major price increase that turned many people into millionaires took 8 years..
To summarize this point, Dogecoin hit a little plateau. Rookie investors viewed the plateau as a signal that the cryptocurrency died.
Doge Does Have Some Real Problems
Doge does have some serious problems with it. That said, we would necessarily call Doge dead as these problems have not seemed to impact investment in the cryptocurrency a significant amount.
This section will cover some of those problems.
Too Much Inflation
The biggest problem with Dogecoin from an investment perspective is that the inflation is too large. The block reward is 10,000/DOGE per block at a mining rate of 1 block per minute.
That means 14.4 million Dogecoin are created each day, which is way too many for it to be considered stable.
Of course, this does not mean that Dogecoin is dead. It just means that it’s a very inflationary investment. The problem with an inflationary investment is that it can die out quickly if demand for the new supply of tokens is not met.
The other problem with Dogecoin is that there are no layer 2 protocols built on top of it. This makes the utility of it very narrow.
It is simply a very inflationary token that can be used to send value digitally. More accurately, it is basically a big pump and dump scheme based on a cryptocurrency originally created as a joke. There are no smart contracts, there is no Lightning Network, decentralized finance, or anything like that.
That answers the question about whether or not Dogecoin is dead.
Dogecoin is certainly not dead. It’s still up a lot compared to the beginning of the year. Admittedly, it has slowed down quite compared to its peak.
Now, will Dogecoin die?
That is unlikely at this point. But the growth will likely stagnate or even shrink for the rest of 2021. There are better long term cryptocurrency investments than Dogecoin at the present time.