Should You Buy Dogecoin While It's Under $1?

Dogecoin (CRYPTO: DOGE) was the world's first meme cryptocurrency. It was founded in 2013 by two friends who used the "Doge" meme (which was sweeping the internet at the time) as inspiration. They admitted the whole exercise was a joke, so they never expected Dogecoin would go on to amass a market capitalization of over $90 billion in 2021.

However, Dogecoin struggled to build on those gains and is currently trading at just $0.20 per token, which is 72% below its 2021 record high of $0.73. The token has struggled to find a legitimate use case out in the real world, so its value continues to be determined by speculative investors who typically only seek short-term gains.

But the cryptocurrency industry currently operates in the friendliest political and regulatory environment in its history, as President Donald Trump's administration attempts to make America the world leader in this financial technology. Therefore, if Dogecoin ever had a chance to regain its momentum, this would be the moment. Should investors buy the meme token while it still trades for less than $1?

Image source: Getty Images.

Dogecoin lacks quality fundamentals

Trump has supported a number of pro-crypto policies since kicking off his second term in office earlier this year. The Genius Act, for instance, sets out clear guidelines for stablecoin issuers. Then there is the digital assets stockpile, where the U.S. government stores a number of different cryptocurrencies it has seized as a result of criminal activity.

Further, the president appointed crypto advocate Paul Atkins to run the Securities and Exchange Commission (SEC), and the agency is now regulating the industry with a much lighter touch. Unfortunately for Dogecoin, it isn't a stablecoin, nor is it one of the cryptocurrencies included in the digital assets stockpile. In fact, it isn't even clear whether the meme coin will benefit from the SEC's friendlier regulatory stance, because there doesn't appear to be any groundbreaking new use cases in the pipeline.

Only 2,112 businesses accept Dogecoin as payment for goods and services worldwide (according to crypto directory Cryptwerk), and many of them are obscure internet and crypto services companies. Most businesses might be put off by Dogecoin's extreme volatility because it makes cash-flow management very challenging, and if consumers can't spend their tokens at their favorite stores, they have no reason to hold onto them.

Plus, since Dogecoin hasn't made a new high since 2021, isn't a good store of value, either. Subsequently, it hasn't won the support of the investment community like Bitcoin (CRYPTO: BTC) has, which would have otherwise been a huge source of demand.

Supply could be a major barrier to further upside

Like Bitcoin, Dogecoin is a decentralized cryptocurrency, which means it can't be controlled by any person, company, or government. Tokens are earned through a process called mining, which involves using computers to solve complex equations in order to verify transactions on the blockchain.

However, unlike Bitcoin (which has a fixed supply of 21 million coins), Dogecoin's supply is technically unlimited. There is a cap on how many tokens can be mined each year, but there is no end date, which means new supply will enter circulation until the end of time. That is a huge barrier to further upside, because existing investors are diluted every time new tokens are mined.

Dogecoin has 151.4 billion coins in circulation as I write this, and at the current price of $0.20 per token, it has a market capitalization of about $30 billion. Therefore, when supply inevitably doubles to 302.8 billion tokens, the price-per-Dogecoin will technically have to halve to $0.10 in order for its market cap to stay the same.

Without a fundamental use case capable of creating real value, that is the most likely outcome.

Dogecoin's track record points to more downside

Dogecoin's 2021 rally, and its post-presidential election rally in 2024, were both driven by speculative frenzies which had little fundamental basis, and Tesla Chief Executive Officer Elon Musk partly fueled both of them.

In 2021, he actively promoted the coin on social media and even during an appearance on Saturday Night Live. He then triggered a rally in late 2024 when he agreed to join the new Trump administration to run the Department of Government Efficiency, or DOGE for short. The name -- which he helped come up with -- is a nod to Dogecoin.

After Dogecoin's 2021 rally peaked at a record high of $0.73 per token, it went on to lose more than 90% of its value in the following 12 months, hitting a low of about $0.05. The token seems to be on a similar trajectory right now, having declined by 57% from its post-election high of $0.47.

Speculative frenzies never last, and with no sign of a concrete use case on the horizon, I think Dogecoin is more likely to sink to rather than soar to $1.

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.