The meme token Dogecoin (CRYPTO: DOGE) has been on a phenomenal run since Election Day, up more than 150%. Dogecoin is also up more than 360% on the year. President-elect Donald Trump has helped to awaken the crypto market and encourage other investors who were previously on the sidelines.
With Bitcoin, the world's largest cryptocurrency, recently surpassing $100,000, many believe the rally is poised to continue into 2025. Investors are bullish on a more favorable regulatory environment and hope to see the Federal Reserve continue lowering interest rates.
So should you buy Dogecoin while it's less than $0.60? Let's investigate.
The power of virility
Software engineers created Dogecoin as a joke. People found the token funny, mainly because of its adorable Shiba Inu mascot. Shiba Inu, another meme token, was inspired by Dogecoin. But what started as a joke is now the seventh-largest cryptocurrency in the world by market value.
Dogecoin doesn't appear to have many use cases, although you can use it for payments in limited cases like most other cryptocurrencies. Dogecoin also has an unlimited supply, so it won't be able to hedge against inflation, which many believe is Bitcoin's main value. One thing Dogecoin has done better than arguably any other cryptocurrency is leveraging the power of community.
The funny aspect of the Shiba Inu mascot prompted the popularity of the token and garnered attention from celebrities and billionaires such as Tesla Chief Executive Officer Elon Musk and Dallas Mavericks owner Mark Cuban.
The Mavs, thanks to Cuban, accept Dogecoin as payment for tickets and merchandise. Musk reportedly purchased Dogecoin as one of the three cryptocurrencies in his portfolio and has been an active promoter of the token to his more than 206 million followers on X, the social media platform he owns. This kind of promotion has been powerful. While Dogecoin is not the largest token by market cap, it's widely outperformed Bitcoin and Ethereum, the second-largest cryptocurrency in the world, during the past five years.
Dogecoin Price data by YCharts
Dogecoin's network has undergone some upgrades during the years and many holders use the token to tip people creating content on social media platforms like Reddit. The Dogecoin community has also stayed loyal to the token, which is why it usually outperforms in crypto bull markets.
Should you buy Dogecoin under $0.60?
This recent breakout for Doge sent the token to $0.45 on the morning of Dec. 5. Dogecoin's all-time high came in 2021, when promotions from celebrities like Musk sent the token to $0.74.
Dogecoin has been a reliable outperformer in past crypto bull markets, so I would not be surprised to see the token continue to rise, especially with many analysts and experts saying that the crypto rally could have legs. Trump has promised to clarify regulatory gray areas for the industry, pass bills that would encourage growth in the sector, and remove roadblocks. Securities and Exchange Commission Chairman Gary Gensler, whom many view as a crypto skeptic, has already said he will step down from his role when Trump takes office.
Like anything else, crypto rallies usually experience pullbacks at some point, especially with crypto prices already up so much. That could be in a month, a year, or five years. Given that Dogecoin is more volatile than Bitcoin, a pullback in Bitcoin could result in an even larger step down for Dogecoin, so investors need to be careful. The token can move higher near term, but given its higher volatility and lack of utility, I am personally not a buyer.
Should you invest $1,000 in Dogecoin right now?
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Bram Berkowitz has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
