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Dogecoin (CRYPTO:DOGE) has been one of many most talked about meme tokens of 2021. And for good purpose — it climbed 15,219% to peak in Could. Its market share has gained a lot that now it is the tenth largest crypto participant by that measure.
Immediately, Dogecoin is buying and selling at about $0.17. Contemplating its momentum this yr, it could appear extremely attainable that the token can rapidly attain $1. However wait, not so quick. It is vital to do not forget that Dogecoin has additionally slipped 76% from its peak. Let’s take a better take a look at this common cryptocurrency to see what path it could take sooner or later.
From 2013 to at the moment
Two software program engineers launched Dogecoin in 2013. It began out as a joke one among them made on social media, poking enjoyable on the variety of cryptocurrencies that saved popping up. However Dogecoin finally attracted customers and traders — and picked up velocity this yr. The cryptocurrency has change into notably delicate to feedback made by Tesla CEO Elon Musk. For instance, he tweeted this week about accepting Dogecoin as fee for some Tesla merchandise — and Dogecoin soared greater than 20% in a matter of minutes.
So, we all know that Musk’s phrases can push Dogecoin larger. However are there some other components that might do the identical? Proper now, Dogecoin faces two points that stand between it and a a lot larger valuation.
Primarily, Dogecoin does not distinguish itself among the many 1000’s of cryptocurrencies on the market. Gamers like Ethereum, as an illustration, provide a blockchain loaded with decentralized applications — and the potential to reinvent the way in which enterprise is finished in lots of industries. One other instance: A crypto corresponding to Polkadot makes it straightforward to switch information from one blockchain to a different. Dogecoin does not provide one thing to set it other than rivals. As an alternative, it is merely a foreign money. It is accepted by a couple of massive names such because the NBA basketball group the Dallas Mavericks. However many of the 1,900 retailers that take Doge are fairly small.
Dogecoin’s second problem is its provide. A vast most coin provide means traders will not have the sensation that this asset is scarce — and that is prone to maintain again positive factors. About 14 million Doge are mined daily. Greater than 132 billion are at present in circulation.
A possible $132 billion market worth
Now, let’s circle again to our unique query: Can Dogecoin attain $1? Immediately, if Dogecoin have been to hit that degree, its market worth would attain $132 billion. That might put it in third place after Bitcoin and Ethereum when it comes to market worth. Such a place appears unlikely contemplating there are different gamers that supply extra options and real-world utility than Dogecoin. So, I feel Dogecoin might attain $1 provided that the cryptocurrency market as a complete soars in value. Or Dogecoin might attain that degree if it expands into different areas corresponding to good contracts. And naturally, there are no ensures that these issues will occur.
I’ve held on to a really small Dogecoin place — one which I purchased as a enjoyable ingredient so as to add to my portfolio. However I would not advocate going all in on this cryptocurrency. It is vital to recollect Dogecoin is excessive danger. Although cryptocurrency typically is dangerous, there are gamers that supply a bit extra stability — and far higher visibility.
This text represents the opinion of the author, who might disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one among our personal — helps us all suppose critically about investing and make selections that assist us change into smarter, happier, and richer.
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