Dogecoin's Comeback Is Much Further Along Than Most Realize

Many investors see Dogecoin's price and assume a potential comeback is only just beginning because it isn't close to its former high.

Investors have been closely monitoring the price of Dogecoin (CRYPTO: DOGE) as it continues to soar. Currently, at roughly $0.35 per coin, Dogecoin's price must almost triple to reach $1. This significant milestone number could signal legitimacy for a cryptocurrency that began as a joke. But how likely is it, and does Dogecoin offer a legitimate upside for investors?

Here is what you need to know.

Many investors see Dogecoin's price and assume a potential comeback is only just beginning because it isn't close to its former high. Dogecoin's price must double from here to hit new highs and is nearly a triple away from reaching $1 per token.

However, Dogecoin's comeback is already much further along than most realize. Unlike some cryptocurrencies that have a fixed supply, Dogecoin does not. Approximately 14.4 million new tokens are mined and added to the supply daily. At its peak in 2021, Dogecoin's market cap reached roughly $73.8 billion, while it's back up to $52.7 billion today.

In other words, Dogecoin's price is about 50% off its high, while its market cap is down only 28%. That's how inflation works in cryptocurrencies and fiat currencies; if the supply grows faster than demand, the value of each token or dollar decreases. Dogecoin will always have this flawed trait, continually pushing down its price.

Hypothetically, Dogecoin's price would increase if demand increased. However, several factors influence that, and they don't particularly favor Dogecoin.

First, meme coins like Dogecoin appeal to a limited audience. People have made money on Dogecoin and other meme coins, but they're highly volatile and risky, don't represent any underlying business or asset, and have little use in daily life. Buying meme coins is closer to gambling than investing, which is OK as long as you recognize the risks involved and limit them to a tiny portion of a diversified portfolio. Many investors won't participate.

Second, there's increasing competition. While Dogecoin was among the first meme coins and is still the largest today by a considerable margin, newer meme coins have gained steam, including Shiba Inu ($11.8 billion market cap), Pepe ($6.4 billion), and Official Trump ($5.8 billion).

Unfortunately, meme coins often depend on virality to generate the demand that lifts prices. One could argue that Dogecoin must now battle for mindshare with its core audience.

There's no telling how high Dogecoin's recent momentum might carry it, but the odds seem against its price running to a dollar per token.