Dogecoin vs. Bitcoin: Which Is the Better Buy?

Dogecoin is sitting on a 324% gain for this year, trouncing the 107% return generated by Bitcoin (BTC 1.65%). Going forward, which one is the better buy?

Dogecoin (CRYPTO:DOGE) has had an interesting 2024. The meme token started the year trading near its 52-week low, but news of Donald Trump's presidential campaign brought new attention to the token, sending it soaring.

Dogecoin is now up more than 324% this year, easily beating the 107% return generated by Bitcoin (CRYPTO:BTC). So, which one is the better buy going forward?

The Musk influence Throughout 2021, Tesla (NASDAQ:TSLA) CEO Elon Musk often shared Dogecoin-related memes on social media — particularly on X (NYSE:PARA) (formerly Twitter), which he now owns. He even called it his favorite cryptocurrency, which investors took as a crystal-clear endorsement.

Musk's influence over Dogecoin's price movements hit a fever pitch when he appeared on Saturday Night Live on May 8, 2021. Investors speculated that Musk would make an even bigger, more public proclamation of his support. As it turns out, he merely participated in a comedy skit — nothing of substance came from the event. Dogecoin immediately plunged, and it still hasn't reclaimed the all-time high it hit that weekend.

To Musk's credit, he tried to add some utility to Dogecoin to help support its value. At the end of 2021, he announced that Tesla would accept the token as payment for certain items of merchandise. That didn't move the needle in terms of adoption, and its price continued to trend lower.

But Dogecoin appears to be back. Musk was a big financial backer of President-elect Trump's reelection campaign, and one of Trump's first post-election announcements was his intent to form a new entity called the "Department of Government Efficiency" — D.O.G.E for short — which appeared to be a reference to Musk's favorite cryptocurrency.

Musk will serve as the head of D.O.G.E alongside Vivek Ramaswamy. Shockingly, but not surprisingly, Dogecoin has more than doubled since Nov. 5, though there's no indication that the new initiative — which will not be an official government department — will have any tangible connection to the token.

Bitcoin has real tailwinds Many enthusiasts predict cryptocurrencies could eventually become a replacement for traditional money. Bitcoin, for example, is decentralized, so it can't be manipulated by any one person or government, and it's built on a reliable system of record called the blockchain. However, consumers and businesses haven't adopted Bitcoin in large enough numbers to give it real utility as a currency.

In fact, just 8,952 merchants accept Bitcoin as payment worldwide, according to Cryptwerk. That's far better than Dogecoin, which a mere 2,521 businesses are willing to accept, but if consumers can't spend their crypto on everyday goods and services, they don't have much reason to hold onto it. Without widespread adoption, it's very difficult for a currency to maintain value.

There is a growing consensus that Bitcoin might serve better as a store of value rather than a currency, making it similar to gold. The U.S. Securities and Exchange Commission approved a number of Bitcoin exchange-traded funds (ETFs) this year, providing investors with a simple, regulated way to park money in the cryptocurrency.

A single Bitcoin currently trades for around $92,000, but Cathie Wood's Ark Investment Management thinks that the price could soar as high as $1.48 million by 2030, based on eight potential use cases that could drive adoption.

Bitcoin becoming an accepted analogue of digital gold is one of those use cases, and Ark believes it will become a part of the asset base for institutional investors, which is a real possibility now that spot Bitcoin ETFs are widely available. Ark predicts companies — and even governments — could choose to hold Bitcoin in their reserves alongside traditional cash, a potential hedge against negative economic events like inflation.

Interestingly, Trump has said he's open to the idea of creating a Bitcoin reserve for the U.S. government, which means the world's wealthiest nation could become an active buyer of the cryptocurrency.

Dogecoin investors should learn from what happened after 2021 Even though Dogecoin is sitting on triple the percentage gain of Bitcoin this year, it still hasn't touched its old peak. Meanwhile, Bitcoin continues to set new highs, and it has a clear case for further upside.

Dogecoin has little utility, and it doesn't have the support of institutional investors or regulators. Therefore, it's merely a vehicle for speculation. Investors should learn from what happened the last time a speculative frenzy sent the token surging — it suffered a 92% decline over the following year because there were no fundamentals behind its momentum.

As a result, Bitcoin is the better long-term buy