Today's elevated bark for Dogecoin.
The go-to meme currency for numerous crypto enthusiasts, Dogecoin (DOGE dropping 0.03%), is demonstrating another commendable performance today. This four-legged digital currency is currently up 7.7% in the past 24 hours, as of 12:45 p.m. ET, extending its victorious streak over the past few days, and boosting its one-month return for this coin to a whopping 185% at this moment.
It's worth mentioning that most of Dogecoin's recent gains can be linked to former president Donald Trump's reelection. This cryptocurrency experienced single-day increases exceeding 20% post-election, and its value more than doubled within just a month. The notion of Elon Musk establishing a "Department of Government Efficiency," which alludes to Dogecoin given its DOGE acronym, has also played a part. Moreover, within the crypto investor community, there's usually a disproportionate amount of enthusiasm among meme coin supporters during these exchanges.
However, there seem to be a few other factors boosting Dogecoin today. Let's delve into the factors bolstering this token's rise.
Elon Musk's personal stake
Although the Dogecoin narrative retains a predominantly meme coin-driven hype (with this time an election-related catalyst), there's another significant element crypto investors are keeping a close eye on with regards to Dogecoin: Musk's potential ownership stake in Dogecoin.
An intriguing, yet unverified, recording of Musk appearing to discuss a personal stake in Dogecoin, coupled with SpaceX's reported corporate stake in Bitcoin, is reportedly fueling today's shift in the meme coin. While the extent of Musk's ownership stake and his ongoing purchases of Dogecoin remain unclear, his continued endorsement of the dog-inspired crypto has undeniably sparked investor interest, with many jumping on the bandwagon with vigorous buying activity.
Proceed with caution
It's important to note that Dogecoin is an inflationary currency without a cap on its supply. In theory, an infinite number of Dogecoin can be minted, although the project burns tokens occasionally to control the yearly increase in supply to around 5 billion coins.
This means that for Dogecoin's price to align with its valuation, investors will need to continually buy more tokens than the annual issuance, leading to substantial capital outflow, potentially up to $2.5 billion per year, to keep the price stable should it reach the $0.50 level. Given this information alone, I remain cautious about Dogecoin's potential to scale new heights, though–as history shows–anything's feasible during these fervid hype cycles.
Investors are closely watching Elon Musk's potential ownership stake in Dogecoin, which could be influencing its current rise. Regardless of Musk's involvement, it's crucial to approach investing in Dogecoin with caution due to its inflated supply and the substantial capital required to maintain its price.
