Trading for around 17 cents as of this writing, if you held Dogecoin (CCC:DOGE-USD) last January, you’ve seen a 35x return on your investment. Even as the original “pupcoin” remains down around 76.7% from its all-time high.
However, if you got into Dogecoin well after that?
Well, chances are you’re down big. If you’re still holding, you may be hoping that an eventual rebound to its high water mark is in store. With the help of Tesla (NASDAQ:TSLA) chief executive officer Elon Musk, it may seem like it’s on the verge of bouncing back.
Musk may be correct that DOGE-USD is much more useful for payments than Bitcoin (CCC:BTC-USD). But it is doubtful that this factor alone will be its ticket back to higher prices. It may have some utility as a medium of exchange. Yet, like I’ve said before, it won’t be until it gains the respect of the “smart money,” and improves its functionality, that this crypto, currently the twelfth-largest by market capitalization, will once again move up the CoinMarketCap ranks.
Therefore, as the story remains largely unchanged, the best move also stays the same. As the crypto market remains at risk of staying in bear market mode, and as further enhancements to this particular crypto are still a work-in-progress: pass on Dogecoin.
Dogecoin and Elon Musk’s Latest Endorsement
Through tweets, interviews, and even on national television, Elon Musk played a big role in making this former “jokecoin” as famous as Bitcoin throughout 2021. Even as DOGE-USD and its “pupcoin” peers, like Shibu Inu (CCC:SHIB-USD), have peaked in popularity, the tech impresario continues to promote it.
First, Musk announced that Tesla will start accepting Dogecoin payments for some non-auto merchandise on its website. This news helped give DOGE-USD a boost during December. Second, in a recent interview on the Lex Fridman Podcast, he publicly made the case why it’s a better crypto for payments than Bitcoin.
His argument is that Dogecoin, with its higher transaction volume capacity, lower fees, and even its inflationary nature, beats out BTC-USD when it comes to its utility as a medium of exchange. However, vocal Dogecoin critic and Bitcoin aficionado, Vijay Boyapati was quick to point out the flaws in his argument.
Mainly, that Musk’s statement about Doge’s greater block size was misleading. Also, that the “memecoin’s” lower transaction fees are a product of low network usage. Not due to Dogecoin building a better blockchain. But even if there is substance to Musk’s argument, I wouldn’t view it as a sign that this crypto will make a comeback in 2022. Instead, best case scenario, it will hold steady.
Worst case scenario, this “pupcoin” will keep dropping.
Price Forecast for DOGE-USD
So, if Dogecoin isn’t heading “to the moon” again, where’s it going from here?
First off, I’ll admit there is a path this crypto can make its way back to higher prices. With further utility upgrades, it may finally be able to shake off its tongue-in-cheek reputation. In turn, gaining the respect of institutional investors.
If this happens, then it becomes more reasonable to believe this crypto has a shot of giving Ethereum (CCC:ETH-USD), or at least its “killers,” a run for their money. Until then, though, at best it’s likely to languish at or near today’s prices.
For the time being, only the continued promotional efforts of Musk will help keep Dogecoin in the public eye and prevent more drops in price.
Having said this, don’t assume that DOGE-USD will just hold steady, with a long-shot chance of spiking again. Another sharp price decline remains a risk as well. As I discussed recently when talking about Crypto.com Coin (CCC:CRO-USD), changing market conditions could counter coin/token-specific catalysts. In other words, further functionality improvements may fail to counter downward pressure caused by a more “risk-off” minded market.
That’s not to say Dogecoin is at risk of falling all the way back to below a penny. But at the same time, don’t assume 17 cents, a price level it’s bottomed out at before, will remain its floor.
The Verdict: Crypto Bulls Should Still Look Elsewhere
Elon Musk has helped DOGE-USD continue to be one of the most talked-about cryptos. This by-itself isn’t going to help it soar in price again. I concede other developments could spark one. Assuming the crypto market stabilizes next year.
But, if it doesn’t and it stays in bear market mode, then expect this memecoin to head to lower prices.
Even if you’re confident that crypto is going to make a comeback in 2022, Dogecoin still isn’t the best way to play it. Stick to more promising altcoins, or perhaps Ethereum itself, to make that wager.
On the date of publication, Thomas Niel held LONG positions in Bitcoin and Ethereum. He did not hold any of the other securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.