Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.
You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More
The cryptocurrency landscape looks very different today than it did at the height of the frenzy among investors in 2021. Back then, the vast majority of mainstream tokens were experiencing strong gains, whereas today, investors are being much more selective.
For example, industry leaders like Bitcoin and Ethereum are trading in the green in 2023 with gains of more than 50%, whereas speculative token Dogecoin is in the red and is down about 3%.
Dogecoin is still a favorite of some crypto enthusiasts, including Tesla (TSLA 0.30%) Chief Executive Officer Elon Musk, but not even he could stop the token from sliding more than 90% from its all-time high. So is it time to finally give up on the token for good?
Image source: Getty Images.
Dogecoin isn’t the only cryptocurrency token with this problem. Virtually none of them have established a clear, mainstream use case that could entice mass adoption by consumers and businesses. Without that, it becomes very difficult to sustain value because the only people who want to hold on to their tokens are those who believe someone will come along later and pay a higher price. In other words, speculators.
For example, a mere 2,163 merchants around the world accept Dogecoin as payment for goods and services. Keep in mind, there are an estimated 334 million registered businesses globally, so Dogecoin’s penetration so far can barely be classified as a drop in the bucket.
One high-profile merchant, however, is Tesla. In early 2022, the company said it would start accepting Dogecoin as payment for merchandise (like clothing) in its online store. Plus, Musk has tried to support the token by accepting it for novelty products like the Burnt Hair fragrance he released under his Boring Company last year.
He has also been a vocal advocate for Dogecoin, regularly supporting it with bullish commentary on the Twitter social media platform and even on an episode of Saturday Night Live back in 2021 — which happened to mark Dogecoin’s peak price of $0.74 per token. It now trades for about $0.06, a decline of 91% from the peak.
So far, nothing Musk has done has been enough to arrest Dogecoin’s decline. That’s probably because there are greater forces at play, namely the deteriorating sentiment toward cryptocurrencies among investors. It appeared to reach new lows in 2022 after a series of spectacular collapses in some of the industry’s most popular projects and exchanges.
The TerraUSD stablecoin de-pegged and wiped $60 billion in value off the face of the Earth seemingly overnight. Then top crypto exchange FTX was caught commingling client funds with its own, and when it all unraveled, regulators were left chasing approximately $3 billion in missing customer funds. In both cases, the investors faced a full and complete loss with practically no recourse.
Now Binance — the world’s largest crypto exchange — is being sued by the U.S. Securities and Exchange Commission (SEC) for operating a “web of deception,” having allegedly committed similar offenses. It’s part of a broader crackdown by the SEC to bring the cryptocurrency industry into compliance with the same rules and regulations that apply to other financial securities, which exist to protect investors.
It’s little wonder trust is near an all-time low in the crypto sphere. Here’s the problem for Dogecoin: Speculative tokens with no real use case could be among the last to recover from this challenging time for the industry — if they ever recover at all.
If I were an investor holding Dogecoin, I’d be thinking about selling my tokens while they still have at least a little bit of value. There doesn’t appear to be any catalyst on the horizon that would lead to a meaningful recovery.
Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Tesla. The Motley Fool has a disclosure policy.
Market-beating stocks from our award-winning analyst team.
Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/18/2023.
Discounted offers are only available to new members. Stock Advisor list price is $199 per year.
Calculated by Time-Weighted Return since 2002. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.
Making the world smarter, happier, and richer.
Market data powered by Xignite and Polygon.io.
