Dogecoin has grabbed the attention of the mainstream thanks to support from Elon Musk, Snoop Dogg, and other celebrities. The newfound success of the cryptocurrency has led many to wonder if it has the potential to reach $1/DOGE.
It’s a tall task for a cryptocurrency like Doge to hit $1. However, the possibility of this happening does exist. This article will cover some of the potential scenarios in which Dogecoin could hit $1. We will also offer a brief history of Dogecoin to put everything about the cryptocurrency into context.
Dogecoin… A Brief History and Tokenomics
Dogecoin is a cryptocurrency launched in December 2013 by Billy Markus and Jackson Palmer as a sort of satire to poke fun at the wild speculation that was occurring around Bitcoin. The name, for those familiar with internet culture, is a Shiba Inu dog from a popular internet meme.
Anyway, Dogecoin is a fork of Litecoin and utilizes Scrypt as its hashing algorithm to make it more difficult for ASIC miners to mine.
With that out of the way, the cryptocurrency was widely regarded as a joke cryptocurrency. It received very little attention from investors. In fact, it was mostly used on Reddit as a way to tip users for good contributions to the site.
Remember, the coin was basically worthless for most of its existence, only rarely going above 1 cent up until its newfound popularity in 2021.
It’s important to understand the tokenomics of Dogecoin before explaining the likelihood of it reaching $1.00. Here are the tokenomics of Doge and other relevant information:
Dogecoin Ticker: DOGE
Dogecoin Price: $0.3444
Dogecoin All Time High: $0.71 on May 8th, 2021
Dogecoin Market Cap: $34 billion
Circulating Supply: 129 billion
Maximum Supply: Infinite
Dogecoin Block Reward: 10,000/DOGE per block
Dogecoin Block Time: 1 minute
Dogecoin Produced Per Day: 14,400,000 DOGE per day
Dogecoin Could Hit $1
First of all, the odds of Dogecoin breaking above $0.50 were extremely small. Despite those small odds, Dogecoin still broke above $0.50. It even briefly broke above $0.70.
What is the point of mentioning that?
Dogecoin has greatly exceeded expectations. Due to that, we are very hesitant to claim that Dogecoin will never break $1.00.
With that in mind, the odds of Dogecoin reaching $1.00 are still low. This section is not about why Dogecoin will not break $1.00, though. We will cover scenarios in which Dogecoin can hit $1.00.
There are a few scenarios where this becomes an actual possibility. Unsurprisingly, most of those scenarios revolve around its most well-known promoter – Elon Musk.
Tesla Accepts Dogecoin?
Tesla made headlines when founder Elon Musk announced the company would begin accepting Bitcoin for payments. Naturally, the Bitcoin community went wild at this breaking news.
Sadly, the news was short lived as Musk announced that Tesla would halt Bitcoin payments due to concerns about the environmental impact of Bitcoin mining. Musk did add that he would
Note: Tesla has not yet sold the ~42,000 bitcoin that it had purchased a month prior. It does not appear that Tesla has any plans to sell this bitcoin.
Now, the point that had many Dogecoin excited was Musk mentioning that Tesla would look for Bitcoin alternatives.
This has led to speculation that Tesla would begin accepting Dogecoin as payment. So, how likely is it that Tesla accepts Dogecoin?
Extremely unlikely. The environmental impact of Dogecoin is obviously less than Bitcoin. But that is mostly a factor of Dogecoin not being nearly as popular as Bitcoin.
With that in mind, the unlikely event of Tesla accepting Dogecoin would lead to a sharp increase in price for Dogecoin. This price increase would almost certainly launch the price over $1.00.
To summarize, Tesla accepting Dogecoin as payment would send the price of DOGE over $1.00. Furthermore, Tesla adding DOGE to its balance sheet would send the price over $1.00.
Neither of those seem unlikely. But Dogecoin reaching $0.70 also seemed unlikely.
Elon Musk Continues His Support of DOGE?
Elon Musk has been a huge supporter of Dogecoin. He sent out a tweet in April claiming that SpaceX would “put a literal Dogecoin on the literal moon.”
Granted, that tweet was on April 1st, so many did not take it seriously. There is still reason to believe that Musk supports Dogecoin. He has continued to tweet support for the cryptocurrency as recently as last week.
This continued support from one of the richest men in the world bodes well for the cryptocurrency. Many people look up to Musk and will follow his advice for better or for worse.
To summarize, Musk’s continued support of Dogecoin is a necessity for the price to reach $1.00. If Musk stops supporting Dogecoin, then the price will crater. Fortunately for DOGE holders, Musk still actively supports Dogecoin.
Continued Endorsements From Celebrities?
Dogecoin has more than just the support of Elon Musk. It received support from Gene Simmons and Snoop Dogg. The price surged after receiving more celebrity support.
This, of course, makes sense as more exposure increases demand for the cryptocurrency. It goes without reason that more celebrity support of the cryptocurrency will lead to an increase in its price.
Is this likely?
Probably. Celebrities will see a chance to increase their popularity amongst the rabid Dogecoin fanbase by doing a quick shoutout to the cryptocurrency. This is one area where you can expect to see some growth with Dogecoin.
Will celebrity endorsements be enough to raise the price over $1?
That remains to be seen. But the increased exposure that a celebrity endorsement provides certainly will not hurt the cryptocurrency.
Why Dogecoin Might Not Hit $1
You may have noticed that most of the reasons Dogecoin’s price will increase revolve around increased media exposure. There is nothing there about a halvening, token burns, or new technology.
There is a good reason for that. Dogecoin does not have a halvening, token burns (outside of lost wallets), nor does it offer any amazing technology.
This is a memecoin. It is not a coin meant to revolutionize the world like Bitcoin or Ethereum. With that aspect covered, this section will cover reasons that Dogecoin likely will not hit $1.00.
Too Much Inflation
The biggest problem with Dogecoin is the inflation. As mentioned previously, 10,000 Dogecoin are produced per minute.
That is an insanely large amount of inflation. It amounts to over 14 million new Dogecoin being released per day and ~5 billion new Dogecoin per year.
Despite that, it is still less inflation than fiat currency. But that amount of inflation will become a problem for Dogecoin in the future.
Sadly, there are no plans to limit the block reward of Dogecoin.
Whales Own Too Much
Another major problem with Dogecoin is that whales control way too much Dogecoin. The top wallet controls 28.4% of all Dogecoin – ~$10 billion worth of DOGE at the current price.
Furthermore, the top 20 wallets combined own about 50% of all Dogecoin.
So, what is the problem with this amount of concentration amongst the top wallets?
If one of those wallet owners decides to dump Dogecoin, then the price will plummet. That is a scary thought for anyone that has an investment in Dogecoin.
They are essentially at the mercy of the wallet addresses.
Note: Only a handful of the top 100 wallets have had no exit activity in 2021. Almost all the wallets have sent DOGE out of the wallet. This means that the wallets are not ‘dead’ wallets.
It Doesn’t Actually Do Anything
Yet another problem with Dogecoin is that it does not actually do anything. Ethereum allows users to build and use smart contracts. Bitcoin makes payment easier and serves as a great store of value due to excellent tokenomics.
Dogecoin does nothing. There are no layer 2 protocols on Dogecoin. The tokenomics are awful due to the inflation.
There is also no real development team behind Dogecoin. It’s just a few part timers working/volunteering to maintain the code.
This is not necessarily a problem with Dogecoin – the project was a joke. The bigger issue is that investors are viewing it as something more than a joke.
The Hype Will Run Out
Finally, Dogecoin has seen tremendous growth mostly due to hype. More accurately, due to a decentralized pump and dump scheme that originated on r/WallStreetBets as the Gamestop short squeeze was coming to a close.
Basically, those that were short squeezing Gamestop bears decided the next target was to pump the price of Dogecoin.
The problem is that Dogecoin adds about 5 billion DOGE per year. This means that demand must continually increase for the price to increase. If demand does not increase, then the price will fall due to the massive increase in supply.
It’s essentially a pyramid scheme that involves getting more and more people to maintain the price. It’s not really sustainable.
Will Dogecoin Reach $1? Is it a good investment?
It really does not look good for Dogecoin reaching $1.00. It is a truly awful cryptocurrency with not much utility and terrible inflation.
That said, 2021 has been a crazy year. Dogecoin did come within 30 cents of reaching $1.00.
So yes, Dogecoin has a real possibility of reaching $1.00. However, the risk of one of the large wallets dumping its Dogecoin always looms in the background.
To summarize, Dogecoin has a good chance of hitting $1.00, but it’s a terrible investment because of runaway inflation and the risk of a whale dumping hundreds of millions (or billions) of dollars worth of Dogecoin on the market.
Would it be worth putting a few dollars into Dogecoin?
Sure, if you can afford to lose it. It just does not have a long enough horizon to warrant a large investment. There are much better cryptocurrencies if you want to make a long term investment (Bitcoin, Ethereum, Chainlink, etc.).
Well, that sums it up for Dogecoin reaching $1.00. It seems unlikely that it will actually hit $1.00, but the entire runup to its current price seemed impossible.
Dogecoin has proven that it is not a coin that you should take for granted. But concerns about centralization make it a terrible investment.